Practice exam volume 1 page 83, the cash reserve calculation.
The subject is taxable at 15%, the cash reserve equal to half of the total year liv exp and medical care for Joe’s father.
I assume the expenses is after tax, but the office answer did not consider tax effect.
anyone please give me a clue on this?
Another confusion on liquidation needs, during the process to calculate liquidation needs, tax is also an issue. Should I consider tax effect in calculation liquidation needs in individual IPS?
…but if $200,000 needs to be withdrawn from the account before retirement (say for educational purposes or a down payment on a home), then be sure to remove the following amount from the asset base: $200,000 / (1 - tax rate) …before calculating the required return from the portfolio.