Analyze_This

markCFAIL, thanks for your response.

I understand conceptually that the effective cap gains tax rate should be lower than the stated cap gains tax rate because we're not counting the taxes that's already been realized/paid.

But my question is more specific to the formula, how does dividing the income percentage from unrealized capital gains by 1 minus the total realized tax rate and multiplying by stated cap gains rate equal the effective cap gains rate?

I think maybe I'm getting tripped up by the denominator 1 minus the total realized tax rate, struggling to grasp what that means conceptually.

Thanks again.