Cutting out above 4000 sounds like a carb/ intake issue to me because that's right where the main jet kicks in. It's also where the ignition breaks down. 1989 is a single-sided rear shock with the newer electrical layout and dual output coil. Those early (blue ?) dual coils would crack their plastic cases and act up. 

It could be so many things. I'd be checking things in this order...

1. Check the simple stuff first. Is the air filter clean/ clear ? Has the Exhaust Gas Recirculation system been properly removed and blocked off ? Are both intake hose spigots tightly screwed into the cyl head ? Are you running only name-brand high octane fuel ?

2. Fit a paper "kitchen towel" into a funnel. Pour the contents of both float bowls individually through the funnel. Any water in the fuel will "bead up" on the paper towel. Are the main jets loose in the bottom of the float bowl ? Are both needles protruding the same amount from the slide ?

3. Is the L-to-R cross-over fuel hose crimped or blocked ? Does gasoline flow equally out of both petcocks ? Equally out of both fuel filters ? This diagram shows a better routing system that doesn't pinch the cross-over hose...

4. Have you set the ignition timing using a strobe timing lamp ? (5000 RPM should bring the high speed flywheel mark to the center of the timing window.) 

5. What plugs are you running ? Are the coil wires zero resistance "metal core" wires ? Have you fitted "resistor style" plugs ? Are the spark plug caps "resistor style". 

6. Have the carb diaphragms been checked for leaks/ tares. 

7. Have you adjusted the valve clearances lately ? Airhead valves always tighten during use. 

Hope this helps.

Thanks for your reply! I have checked the fuel system and checked for water in the fuel. Fuel is flowing properly from both sides. Float bowls are clean. Power loss is on BOTH cylinders and occurred suddenly. Just riding down the road and started missing and losing power.  Connections to the head are tight. I remember having to replace the coil on my R80ST for cracking but I thought the newer ones were a little better and I'm not sure how to rule out the electronic ignition. I may know where I can get another coil from a parts bike. Perhaps I'll try that. 

Sincere apologies, my friend. There was something I couldn't remember until I started looking at my old photos. 

Remove the engine front cover, as if you were going to repair the alternator. Unplug the connector coming out of the "bean can" for the ignition module. One of the connectors is ivory/white, the other is black. If the 3-wire ivory connector is cracked, split, or even gets a small chipped area, then the ignition will become intermittent. I can't explain it, but it's true.

That ivory colored 3-wire connector MUST be replaced ! It cannot be glued or repaired. The only reliable repair is to replace the connector, which means replacing the entire connector+wire assembly (aka "the pigtail").

The only supplier that I know of is Rick James at Motorrad Elektrik, who sells the complete "pigtail" (connector pre-installed on the wire). This means the ignition "bean can" has to come off the bike. (This is easy, since the can is mounted to the front of the engine with a quick-detach method that only allows one-way mounting.) You can then work on the bean can on the bench. Some disassembly of the can is required to get to the circuit boards where the wires are soldered to the circuit board.

This is NOT a job for a typical tattooed "motorcycle mechanic", nor is this a job for a person who solders once a year. You want someone who 1) solders ALL THE TIME and 2) owns a temp-controlled soldering iron and 3) who knows how to solder at the component level. If too much heat gets applied, the traces on the circuit board will lift and you'll be buying a whole new circuit board. If too little heat gets applied you'll end up with a "cold solder joint" and the wire will vibrate off sometime in the future. 

When the can is repaired it can be offered back onto the engine. As far as physical placement, the can only fits one way. However, the angular position of the can determines the engine timing. At this point you will need an ignition strobe light. The "Fast" timing mark should be centered in the flywheel's strobe window at 5000 RPM. (Ignore the old manuals. The position of any marks at idle or any mid-point mean exactly nothing. Exact ignition timing at Full Advance is all that matters.)

Hope this helps.