FVIF (All taxes) : [( 1 + Rart)^N (1 - Tecg)] + Tecg + ( 1 - B)Tcg Part 1 Part 2 Part 3 The formula consists of three parts Part 1 : It represents the tax on complete investment Part 2 : It represents the return of initial investment Part 3 : ?? Can someone explain the 3rd part and also correct me in case I have misunderstood the first 2 parts ?? Thanks

Part 3: is the tax adjusted difference in Basis (if at all the basis differ). If basis remains the same then B = 1 and the last term becomes 0.

i’m pretty shocked because i have no idea what this formula means. is this from private equity?

Portfolio Mgmt - Taxes

Taxes and Wealth Management. Get on it buddy, it’s an important one. Don’t freak out though, the material isn’t that hard.

sidd Wrote: ------------------------------------------------------- > FVIF (All taxes) : [( 1 + Rart)^N (1 - Tecg)] + > Tecg + ( 1 - B)Tcg > > Part 1 > Part 2 Part 3 > > The formula consists of three parts > > Part 1 : It represents the tax on complete > investment > > Part 2 : It represents the return of initial > investment > > Part 3 : ?? > > Can someone explain the 3rd part and also correct > me in case I have misunderstood the first 2 parts > ?? > > Thanks Are you sure the last part isnt MINUS (1-B)Tcg. It may very well be PLUS, but I feel like I remember it being minus. Don’t have the books at work to reference.

> > Are you sure the last part isnt MINUS (1-B)Tcg. It > may very well be PLUS, but I feel like I remember > it being minus. Don’t have the books at work to > reference. Nope, it’s +

DC Z is right about the minus.

ohh yeah taxes, i’ve been solving the problems from first principles, i should probably memorize the formulas because i still can’t figure out the last part in this one

Last term is capital gains tax * fraction of investment that isn’t cost basis

supersharpshooter Wrote: ------------------------------------------------------- > ohh yeah taxes, i’ve been solving the problems > from first principles, i should probably memorize > the formulas because i still can’t figure out the > last part in this one Other than this formula, it seems that most of the tax formulas are ‘logical’. Any one else feel this way?

dlpicket Wrote: ------------------------------------------------------- > DC Z is right about the minus. Crap. You’re right, I was thinking of the capital gains equation: [(1 + R)N(1 –TCG)] + TCGB

> Part 2 : It represents the return of initial > investment > Can someone explain the 3rd part and also correct > me in case I have misunderstood the first 2 parts > ?? sidd: just to be sure, part 2 is not the _return_ of the initial investment, but the _tax_ on the initial investment. why is it there? in part 1, you apply the tax t_ecg to the return _and_ the initial investment - but the initial investment shouldn’t get taxed, so you add back t_ecg after that expression. Not sure if that hint was necessary, just thought I’d throw in my 0.02$.

Hi guys. Are you sure that its PLUS ? I got MINUS in my books

^ It’s minus, above posts agree on that.

Everyone hate taxes!