effective capital gains tax rate

[beaver]

One can express the impact of deferred capital gain taxes using an effective capital gain tax rate that adjusts the capital gains tax rate t_cg to reflect previously taxed dividends, income, or realized capital gains. The effective capital gains tax rate can be expressed as7

T* = t_cg(1 – p_i – p_d – p_cg)/(1 – p_it_i – p_dt_d – p_cgt_cg)

(Institute 241)

Institute, CFA. 2018 CFA Program Level III Volume 2 Behavioral Finance, Individual Investors, and Institutional Investors. CFA Institute, 07/2017. VitalBook file.

The citation provided is a guideline. Please check each citation for accuracy before use.

As the paragraph, I don’t want to just remember the formula. I want to understand how do we come up with this T* = t_cg(1 – p_i – p_d – p_cg)/(1 – p_it_i – p_dt_d – p_cgt_cg). In the curriculum didn’t explain.

Thanks a lot

[cloudykittens]

bumpppp