I cannot understand what the 2nd item is (Notes Book1 p287): T0*(FV of bequest) For a charitable gift, it pays no tax for the return and the capital gain, so…just use (1+r)^n would cover all the gift value…what is the second item for? quite confused…
Not looking at the book. But, for charitable gifts you have the gift which will grow tax free and you also have the deduction on the donor’s income tax return.
jmac01 Wrote: ------------------------------------------------------- > Not looking at the book. But, for charitable > gifts you have the gift which will grow tax free > and you also have the deduction on the donor’s > income tax return. I know this description is from book…however, just take a simple example: I have a portfolio X and I pay no taxes. My portfolio value would be X(1+r)^n in the end, right? I just dont understand where the 2nd item comes from…
Because there is also value in the deduction you get from making the gift. so the gift itself is worth X(1+R)^N and you get to deduct X from your ordinary income in this year’s income tax return (so calculate the future value if this benefit as well).
It’s the total return for all related parties except Uncle Sam.
Check the errata. I thought they removed the charitable gift questions when the donor pays the taxes.