The gift tax/bequest formulas are just too much for my brain right now. Hope it’s just interpreting it.
If RV > 1, then gift now if RV < 1, then bequest
I’m probably in the minority that hopes these come on the exam, but highly doubtful they will. I’ve learned those equations intuitively/understand them, but I haven’t seen them come up on any mocks or 2015-2016 actual.
Right now for me Thurs/Fri will be half dedicated to GIPS and hopefully tacking on a few % points to my final score
Surrender calc is quite simple as per the example… but my bet is that IF it comes up on the exam the question will have some trick… (irregular compounding/ repricing) or you have to derive some input component :0
Maybe this will help as it’s a simple formula extension.
If you know the normal accrual return equation (1 + r (1 - t)) ^ n (which is pretty intuitive), all the equation is is the accrual return for the RECEIVER on top, over the accrual return for the GIVER on bottom. But you adjust the bottom by an estate tax, so x( 1 - T estate).
Have a gift tax? Adjust the top by (1 - T gift). If you know the accrual formula it’s a bit easier to realize what’s going on versus just trying to remember all the subscripts.