Federal Taxes-Joint Filer Report (PDF) - Adj to Inc column?

On the Federal Taxes-Joint Filer Report in the PDF (the last detail report), where does the "Adj to Inc" column come from? How is it calculated? I have "(19350)" for 2016 and the rest of the years are 0.


Good timing on this question because I was just logging in to post a couple of other questions on the Federal Taxes-Joint Filer "report", so I'll just piggy back onto TimeRunner's if that is OK. Hopefully you can answer all of our questions.

I read another post on this "report" at http://www.esplanner.com/question/why-adjusted-gross-income-figure-large.... I understand from that post that the Joint Filer was not intended to be a real report but instead show some "behind the scenes" calculations to help us. But nevertheless, if this is what ESPLanner is using to figure our taxes, I think its fair game to ask questions about things that don't make sense, so my questions are:

1) What inputs are used for the number in the "Nom Assets Inc" column? I am looking at this number for 2015 and it is 13523. My Regular Assets income is 2341. I don't have any other income from assets or special receipts, so I don't understand why the numbers are so different. I know that differences can occur from the nominal/real discussion from the other post, but this is for 2015 and the difference is huge.

2) In the other post, it says pensions are excluded from AGI in the joint filer report. I don't see my taxable pensions (which amount to 39085) in the columns to the left of the "Adj Gross Inc" column, but the number in "Adj Gross Inc" column DOES include my pensions (because if I subtract the sum of the numbers to the left of "Adj Gross Inc" from the AGI number, the difference is 39085). So I guess this one is not really a question, but more of a request ... can you include another column to the left of "Adj Gross Inc" called something like "Pensions" so that when you add up the numbers to the left of "Adj Gross Inc" the resulting sum matches the number in "Adj Gross Inc"?



The "Adj to Inc" is for information only and is not used internally to calculate the Adjusted Gross Income (AGI).
So, even though it's currently wrong, the AGI and federal taxes are correct.

The "Adj to Inc" currently includes:
1, Special Expenses excludable from AGI,
2, Deductible part of Self-Employment Tax,
3, Net IRA cash flow, i.e. individual deductible contributions minus withdrawals, and
4, Real Estate Limited Loss as calculated on Line 10 of IRS Form 8582.

It should include:
1, Special Expenses excludable from AGI,
2, Deductible part of Self-Employment Tax, and
3, Individual deductible IRA contributions.

We'll release an update soon.


1, The "Nom Assets Inc" is the total nominal return on Regular Assets.
It differs from the Regular Assets Income which is the real return on Regular Assets.

You pay taxes on total nominal income, you live on real income.

For example, if your initial Regular Assets balance, i.e. your 31 Dec 2014 balance, is $100,000 and your Nominal Rate of Return is 5% and Inflation is 3%, then your total Nominal Assets Income in 2015 is $5,000 and your real Regular Assets Income is $2,000.

The ratio of Nominal Assets Income to Regular Assets Income is equal to the nominal rate of return divided by the nominal rate of return minus the inflation rate.
In the above example, the ratio is 5%/(5%-3%) = 2.5. i.e. $5,000 = 2.5*$2,000.

2, Pensions are not excluded from AGI.
What post says that they are excluded?


Thanks Mike.

On 1), I am using Monte Carlo planning, so I am not sure what my Nominal Rate of Return is. Is there a way I can determine Nominal RoR when using Monte Carlo? In the "Input and Assumptions" section of PDF report it says my "Mean Real RoR" is 1.47 (rounded) for the MC Portfolio I am using. I am guessing with that Real RoR combined with the fact that I use Cautious Spending might be reason why my Regular Assets Income ($2341) is so much lower than the "Nom Assets Inc" ($13523) in my Joint Filer report. If I knew my Nominal RoR I might be able to apply your formula to verify the accuracy of the numbers.

Regarding 2), I misread the post I provided in earlier in this thread. Sorry. I was hoping you could make an enhancement in Joint Filer report that would show columns to left of AGI to add up to the AGI number, but I guess there are so many things that make up AGI it would probably add too many columns to the report. So I retract that request.


You can solve my formula, Ratio = Nom /(Nom - Infl) for the nominal rate of return, i.e. Nom = Ratio * Infl /(Ratio - 1).
Since Ratio = 5.777 = $13,523 / $2,341 and assuming Infl = 3%, that means Nom = 3.628% = 5.777 * 0.03 /( 5.777 - 1) and hence Nom - Infl = 0.628%.
Given that you've selected the cautious spending at 1/2 the actual real return that means that 2 times .628% is in the stochastic ball park of your average return of 1.47%.
Try it with aggressive spending and you'll see twice the Regular Assets Income.

Thanks Mike. Applying the formula does account for a large difference between nominal and real values. Still scratching my head over how you solved for Nom, but I'll take your word for it.

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