Living Expenses & Taxes

C

cfapasss

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In the IPS questions:
When they say yearly living expense= X amount, do we consider that salary taxes are included in this amount?
 
Not always, but usually.
In any case, you’d at least have the tax treatment for both and the tax rate, although I’ve personally never seen this. Then you could calculate the gross return directly without going through the AT return treatment.
 
Dude, that wasn’t my question.
I am asking if living expenses should include taxes or not as in Sunny confusing vignette.
or maybe I misunderstood u
 
How WOULD it include taxes?
If the taxes you pay for the year is (Income-Expense)*t% = taxes, then including taxes in expenses would understate the net income, don’t you think?
In short, no it does not, unless it includes the tax savings on itself as well, giving you the net after tax income when putting them together, but I don’t see why would the question get so complex.
 
^Ignore MrRetard. Clearly the blocks are beginning to crumble in his pyramid.
#HiBuddy
 
hashtag wrote:
^Ignore MrRetard. Clearly the blocks are beginning to crumble in his pyramid.
#HiBuddy
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Bahaha i came to this post just to read your comment
@cfa
No it’s not included in living expense. the taxes will be netted out from the salary, so it’s not really an outflow coming out flow / expense to worry about listing. BUT be sure to show your work that taxes are being deducted in the return section when solving for the required return. Assuming you are given pre-tax salary and need to get an after tax required return.
 
Thanks alot Mrsmart
guys, check Lima IPS case 2010 AM to know what I’m referring to.
 
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