Since you are willing to help and that’s appreciated. Could you explain me why on same 2009 individual vignette says all withdrawals are taxed and regarding children 200K scholarship is taxed thus in gro amount is equal 250K and in same vignette 100K withdrawal for mortgage payment wasn’t taxed at all? I think it was 2009 AM, am not able to check now. Thanks in advance.
Yes it’s the 2009 exam. I believe it’s the subtlety of the wording in the case. It says “pay off their mortgage and associated taxes” and it states the specific withdrawal amount. If they stated the actual remaining mortgage balance then we’d need to gross it up to account for the taxes.
S2000magician has had to explain this calculation like 6 times this yr already lol. It always comes down whether or not the inflation component is taxable or not. Read the vignette but I’m willing to bet inflation is added then the nominal is adjusted for the tax.
As JayWill mentioned, the vignette doesn’t say that the mortgage balance is (or, rather, will be) CAD100,000 nor that the tuition will be CAD200,000; all it says is that those are the amounts they’ll withdraw to cover those payments. The sentence I cited – in full, it’s, “Briscoe expects a tax rate of 20% to apply to the Tracys’ withdrawals from the investment account.” – makes it clear that you are to treat all withdrawals and only withdrawals as taxable.
thank you. I will check once again. The fact is that I had a problem with return calculation only on this question. Not in any 2016 - 2010. Something must be wrong with this one and is not written in plain language.