Spring 2018 #10a
I see the 2a footer on the wiki making note that in this problem the net investment income & net realized capital gains are net of expenses & then the wiki says "and in this problem also net of taxes". Is this just because taxes weren't given? If there was another line item at the end of the table that was "taxes on capital gains" or "taxes on investment income" then would those amounts be removed from the Net Investment Gain of 3245?
A separate question: "taxes on investment income" would not include "taxes on capital gains", from what I understand those 2 are separate buckets of investment gain. Is that statement correct?
Comments
If investment taxes are not given, then you assume the investment return amounts are net of those taxes.
Yes, those are two separate taxes.
Is there a reason that Investment expenses are not subtracted out in the solution to this question? The Net Investment Income formula in the wiki is: = (investment revenue) – (investment expenses) – (non-federal TLF)
I recognize that taxes are not included in this problem so that part gets ignored, but we are given investment expenses and those are not subtracted out. Is there something I'm missing?
Edit: I figured out the answer to my own question, it's because we are given "Net Investment Income Earned", which already has investment expenses removed.
Correct.