I know this has been asked many times…I’m not asking for the explanation of (1-Tg + Tg.Te) part. I understand that.
But look at CFA Level 3 Errata
This is the exact quote:
Reading 10: In the numerator of Equation 7 (p.294 of print), the final component should be multiplied by the size of the gift/size of estate before gift disbursement: [1-Tg + (TgTe x g/e)]
What is the bolded part? I don’t see x g/e mentioned anywhere else.
g = total gift amount
e = total value of estate, pre-gift
In other words, it’s the percentage of the pre-gift estate value that is gifted.
I have never seen the x g/e term before - I read kaplan notes so granted that it’s not official.
The thing that’s weird is that this is not a new reading. I would’ve thought that kaplan would have made the corrections. Even CFAI didn’t make the correction in the actual text for all these years?
Kaplan hast issued a correction in their errata on this