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Posted by Zigball on December 7, 2006, 8:10 am
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I have a problem maybe you'll be able to help me.I have no
idea of how the calculations work for CPI. I have a formula
that takes the ground rental cost lets say $50000 then takes
the cpi from 2001 which is 185 and divides $50000 by 185
which gives you 270.27 then multiples that by the current
CPI which is 216 and total is $58378.32 this becomes total
ground rentals notice the difference between $50000 and
$58378.32 is $8378.32. My major problem is where does 2001
CPI come into the picture and why, do you know. I don not
understand these calculations much is there anyone who can
help me understand it so that I will be able to do these
calculations myself!
$50000 / 185 * 216 = $8378.32 + $50000 = $58378.32
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Posted by Bill on December 8, 2006, 2:07 am
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zigball@gmail.com (Zigball) posted:
> I have a problem maybe you'll be able to help
> me.I have no idea of how the calculations
> work for CPI. I have a formula that takes the
> ground rental cost lets say $50000 then takes
> the cpi from 2001 which is 185 and divides
> $50000 by 185 which gives you 270.27 then
> multiples that by the current CPI which is 216
> and total is $58378.32 this becomes total
> ground rentals notice the difference between
> $50000 and $58378.32 is $8378.32. My major
> problem is where does 2001 CPI come into
> the picture and why, do you know. I don not
> understand these calculations much is there
> anyone who can help me understand it so that
> I will be able to do these calculations myself!
> $50000 / 185 * 216 = $8378.32 + $50000 =
> $58378.32
It appears your ground rental cost is indexed to the CPI of
2001 (presumably the year the lease started). That would
mean the calculation in question would be stated as follows:
$50,000 = base cost as of 2001, when CPI=185
Current CPI is 216, which is 31 higher than 185
31 divided by base of 185 = 16.75675 %
16.75675 X $50,000 = $8,378.38
[Note: slight difference in pennies probably from rounding.]
Ergo, the CPI increase was about 16.76%, and that was the
amount of increase for your ground rental.
So, for example, if the next year's CPI report for the
relevant period shows 230, you could calculate your ground
rental as follows:
230 - 185 = 45
45/185 = 24.32%
2432 X $50,000 = $12,162
$50,000 + $12,162 = $62,162
Bill
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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
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<< to this newsgroup as well as our anti-spamming policy >>
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Posted by Herb Smith on December 8, 2006, 2:07 am
Please log in for more thread options Zigball wrote:
> I have a problem maybe you'll be able to help me.I have no
> idea of how the calculations work for CPI. I have a formula
> that takes the ground rental cost lets say $50000 then takes
> the cpi from 2001 which is 185 and divides $50000 by 185
> which gives you 270.27 then multiples that by the current
> CPI which is 216 and total is $58378.32 this becomes total
> ground rentals notice the difference between $50000 and
> $58378.32 is $8378.32. My major problem is where does 2001
> CPI come into the picture and why, do you know. I don not
> understand these calculations much is there anyone who can
> help me understand it so that I will be able to do these
> calculations myself!
>
> $50000 / 185 * 216 = $8378.32 + $50000 = $58378.32
Your formula is more correctly shown as:
($50,000 / 185) * 216 = $8,378.32
The 2001 CPI was probably a "given" of your homework problem.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by L K Williams on December 8, 2006, 2:07 am
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> I have a problem maybe you'll be able to help me.I have no
> idea of how the calculations work for CPI. I have a formula
> that takes the ground rental cost lets say $50000 then takes
> the cpi from 2001 which is 185 and divides $50000 by 185
> which gives you 270.27 then multiples that by the current
> CPI which is 216 and total is $58378.32 this becomes total
> ground rentals notice the difference between $50000 and
> $58378.32 is $8378.32. My major problem is where does 2001
> CPI come into the picture and why, do you know. I don not
> understand these calculations much is there anyone who can
> help me understand it so that I will be able to do these
> calculations myself!
>
> $50000 / 185 * 216 = $8378.32 + $50000 = $58378.32
Another way to look at this is to say that the CPI increased
31 points between 2001 and the current CPI, or approximately
15%. So, to make the ground rent neutral, in current
purchaseing value, the rent must increase by the same
percentage. Do the math, it comes out the same.
Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Stuart A. Bronstein on December 8, 2006, 2:07 am
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> I have a problem maybe you'll be able to help me.I have no
> idea of how the calculations work for CPI. I have a formula
> that takes the ground rental cost lets say $50000 then takes
> the cpi from 2001 which is 185 and divides $50000 by 185
> which gives you 270.27 then multiples that by the current
> CPI which is 216 and total is $58378.32 this becomes total
> ground rentals notice the difference between $50000 and
> $58378.32 is $8378.32. My major problem is where does 2001
> CPI come into the picture and why, do you know. I don not
> understand these calculations much is there anyone who can
> help me understand it so that I will be able to do these
> calculations myself!
What they are doing is figuring out the increase from 2001
to now. They are saying that $58,378 in current dollars is
the same as $50,000 in 2001 dollars. The dollars have
depreciated but you are required to pay the same value
rather than the same amount of dollars.
First they take the $50,000 and essentially back out the
2001 CPI by dividing by it. Then they add back the current
CPI by multiplying that figure.
Their calculation, as you have described it, is correct.
Stu
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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