short Q: Why is AMIT = RIT optimal?

[captn]

suppose AMIT < RIT or RIT > AMIT = why is either sitution not optimal?

what is the taxation rule? Does the insurer pay the maximum of the two? (this is in a paper - which one btw?)

[MyKenk]

Originally Posted by captn

suppose AMIT < RIT or RIT > AMIT = why is either sitution not optimal?

what is the taxation rule? Does the insurer pay the maximum of the two? (this is in a paper - which one btw?)

Insurer pays MAX [ Adjusted RIT; AMIT]

It's all in the taxable income paper.

[captn]

so case AMIT > RIT

if this is true insurer can generate more taxable income and avoid ax on it

got it

if RIT > AMIT

then insurer can generate more tax free income and get away without paying tax on most of it.

thanks