Study Session 4-5: Private Wealth Management
I did not nderstand the answer for Objective 1 .
My way of solving this puzzle was this:
The irrevocable trust had no estate taxes but would be charged a cost basis of $100 k on the remaining $1 million.
The revocable trust would be charged 20% estate taxes buts its cost basis would rise to market value ,i.e. no capital gains tax.
So the revocable trust would be charged $0 in capital gains tax and $200k in estate tax upon Becker’s death
The textbook cites yield concession as a reason saying that “yield concession more than offsets the value of tax sheltering equity returns from taxes”. What is yield concession? Thanks.
Want to canvas the consensus for considering size of spending needs relative to portfolio size sufficient to deem an individual to have a below-average ability to accept risk. I understand that ability to take risk is also a function of time horizon, imprortance of goals, flexibility etc., but at what required rate of return do you deem the person to have a below-average ability to assume risk (assume long time-horizon)?
i am totally confused by the residence and source jurisdiction.
i am refering to exercise 4 in reading 12, p. 320 of cfa readings
country A 45% taxes
country B 30% taxes
“after 5 decades of living in country A, a wealth entrepreneur, Andrew, has recently retired and taken up residency in country B. he no lives in country B, but has investments in country A.
let’s assume country A were to exercise residence jurisdiciton and country B source jurisdiction, the effective tax rate:
t credit method = max ( t residence, t source)
Where can I find the Appendix A, B, C mentioned in Reading 12 with regards to tax systems of different countries? can not find it in the book! thank you! p- 314 cfa institute
Is 6.8% return on page 194 of CFAI pre tax real return?
EDIT: sorry, different formula.. I caught my mistake. Ignore this please.
(Wished AF had a delete function for their edits)
Question about when to add the capital gains tax at the end of the tax deferred capital gains tax forumla.
In Volume 2, Reading 11, Question 14
Q1: I dont fully understand the meaning of completion portfolios , also
when the book talks about the single asset completion portfolios, it talks about investing different industries alongside the low basis stock. Does that mean multi-asset class ?
Q2: a constuctive sale is allowed for average investors, but not for investors with low basis stocks? how does IRS differentiate these two investors?
my head doesnt go straight today
Assume a client has a job and has USD5,000 as his savings. But his annual salary does not cover the annual living expenditure by USD15,000. His total investable asset base is USD1,000,000 (including the above savings).
1) One time planned expenditure:
(a) He needs to pay his income tax of USD6,000 in 1 month.
(b) He intends to denote USD3,000 to a charitable institution in 2 month.
2) Recurring expenditure:
His family living expenditure for USD80,000 a year.
He want to make a contingency reserve of USD20,000 a year.
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