Would anybody be so kind to explain why the cost basis needs to be returned in calculating FVIF cgb? FVIF cgb = (1+r)^n*(1- tcg)+tcg*B
And why the cost basis is set to be zero for a tax-deferred account?
Tks!作者: zwjy 时间: 2011-7-11 19:10
if you transform the formula to
FVIF cgb=(1+r)^n- [(1+r)^n-B]*tcg
it's easier to understand.
the 1st term is the FV without tax, and the 2nd term is the income tax you paid. simply speaking, it's income tax and on tax on "gain", the investment cost is excluded from tax作者: mik82 时间: 2011-7-11 19:10
(1+r)^attack作者: lcw77 时间: 2011-7-11 19:10
If you don't attack it, it will attack you.作者: ohai 时间: 2011-7-11 19:10
Good points. But how to explain that the cost basis is set to be zero for a tax deferred account作者: Chuckrox 时间: 2011-7-11 19:10
Because all the contributions into a a tax deferred account are pre-tax (Uncle sam never hit that intitial base with a tax)
Edited 1 time(s). Last edit at Tuesday, May 3, 2011 at 07:49PM by jbaphna.
