Other Formula/Calc Memorization Flashcards
Real rate of return
With inflation a factor
[(1+return)/(1+inflation)-1] x 100
Capital retention method (income need)
(Income-SIS)/(rate of return-inflation)
+ 1st Year need
Actual cash value (ACV)
Benefits paid
Replacement cost - depreciation
Benefits paid = ACV - deductible
Coinsurance formula
Insurance required
Insurance payout
Insurance required= replacement cost x coinsurance %
Insurance payout =
[(insurance carried/insurance required) x loss] - deductible
Disability payout $
Base benefit +( SIS Benefit - SS Disability)
Annuity inclusion & exclusion ratio
Exclusion ratio= investment / expected return
Inclusion ratio = 1- exclusion ratio
Bond purchase taxability
With accrued interest
Taxable interest = interest - accrued interest paid for
Basis = purchase price - accrued interest
TIPS Interest
Adjusted every 6 months
$1k par x (CPI/2 + 1) = current PV
PV current x coupon rate = interest payment
Bond conversion value
(PAR/conversion price) x stock price
Subject to floor, lesser of CV or value as bond
Net operating income (property CF)
Gross rental receipts
+ non rental income
= potential gross income
- vacancy & collection costs
= effective gross income - operating expenses
= net operating income (NOI)
Coefficient of variation.
STDEV / Average Return
Dividend discount model
With 2 dividend growth rates
Always calculate with second growth rate
Rate 1 > 2 = next highest #
Rate 1 < 2 = next lowest #
CAPM Risk Premium
Beta (Rm - Rf)
CAPM
Rf + Beta (Rm - Rf)
Manager’s Alpha
Rp - CAPM
R2 Rules (ratio analysis)
R2> 60 use Jensen then Treynor
R2< 60 use Sharpe
Margin maintenance call at current price
(Market value x maintenance margin %) - (market value - initial margin $ required)
Calculate deductible casualty loss
Lesser of Basis or FMV
-insurance coverage
-$100 floor
-10% of AGI
Equivalent tax deduction
Tax credit / tax bracket
Equivalent tax credit
Deduction x tax bracket
Installment Sale Gain
Gross profit % = profit / contract price
Gain =installment x gross profit %
Like kind exchange w/BOOT
Impute: FMV of received property, adjusted basis, and BOOT
1) realized gain = FMV + Boot - adjusted basis
2) recognized gain= lesser of realized gain or boot
3) FMV- (realized gain - recognized gain)
1245/1231 gain calculation
1) look back and recapture lesser of CRDs or realized gain on adjusted basis (1245)
2) any excess gain is is 1231 cap gain
No 1231 recovery when Gain > CRDs
Charitable Bargain Sale
(Sale Price / FMV) x Basis = adjusted basis
Sale price - adjusted basis = taxable gain
*claim charitable tax deduction
AMT Payable
AMT Tax - Regular Tax
AMT Calculation
AGI (regular post deduction 1040 INC)
+ ADD BACK ITEMS
+ Preference Items
= AMT Base
- Exemptions
= AMTI (alt min taxable income)
x 28% AMT rate (or 26%)
= AMT
Alimony Recapture
Year 1 and 2: (alimony1 + alimony2) - constant $37,500 = recapture
W/ year 3: (2x alimony year 3) + $37,500 = new constant
Then V
Alimony1 + Alimony2 - new constant
Taxation of Social Security
(Provisional Income)
Provisional Income = income(AGI) + 1/2 SS benefit
$25k/$32k. 50% included
$34k/$44k. 85% included
Social security benefit calculations
Early & working while benefitting
Reduced benefit = PIA - ((months early /180) x PIA)
Working w/ benefit before FRA
Deduct $1 for every $2 over limit 1
Deduct $1 for every $3 over limit 2
(Limits given)
Traditional DB calculation method
Unit benefit
(% per year)x(years of service)x(average compensation)
Traditional DB calculation method
Final average
Average of last 3 years
Capped at $245k
Traditional DB calculation method
Past service credits
(% per year)x(all years of service)x(final 3 years average compensation)
Income replacement ratio
(% per year)x(years of service)
ADP/ACP testing
(Elective deferral / employee matching) + profit share
DB Excess Method (Disparity)
Disparity = Lesser of Base % or 26.25%
Base benefit + disparity
DC excess method (disparity)
Disparity = lesser of base or 5.7%
Base + disparity = excess
Up to $147k wage base
Base contribution = contribution base % x $147k base
Excess= (Salary - $147k) x excess %
Donee Pays Gift Tax
(Taxable Amount x 40% tax)
/ (1+ 40% tax)
Insurance claim paid w/ coinsurance
{(Insurance coverage)/(replacement cost x coinsurance %) x damages} - deductible
Disability benefit (insured pays premium)
Salary x coverage %
No tax
Disability benefit (employer pays premium)
Salary x coverage % x (1-tax rate)
Monthly Disability Benefit
(SS factor)
Base Benefit + (SIS - social security benefit )
Policy Surrender tax calculation
Net cash value
+ loans
- premiums paid
+ dividends used for premium
Taxed at ordinary income
Holding period return with margin
{(Sale$ - Margin Basis$ - margin expense $) Buyers Basis$}
/ Buyers Basis$
Bond price change
Duration x (interest rate change/(1+YTM)) x Price
Interest rate change:
Increase (-), decrease (+)
Margin deposit $
(Price x shares x margin%) + put premium
Installment Sale -> sold early to related party
(Seller & Purchaser gain)
Seller: Full Gain on Original Basis
Purchaser: Gain on Value Received (new basis)
Community property gross estate
(All assets -
noncommunity property) /2
Adjusted basis on gifted, appreciated property
(Appreciation at gifting x 40% tax) + original basis
Taxable gift with debt
And type of gain
Gift = debt - basis
Capital gains rates
Net Estate Tax Due
Gross Estate
+gift taxes paid last 3 years
+ adjusted taxable gifts
- $12,060,000 exemption
x 40% estate tax rate
- gift taxes paid
Charitable Bargain Sale
Adjusted Basis
Sale Proceeds Received/ FMV x Basis
Charitable Bargain Sale
Taxable Gain
Sale Proceeds Received
- Adjusted Basis
Life insurance taxable gift
Interpolated terminal value (given)
+ unearned premium (replacement value)
Deduction of annual exclusion applies
Covariance formula
COV = correlation coefficient x (STDEV 1 x STDEV 2)
Correlation coefficient = COV / (STDEV 1 x STDEV 2)
