Pretax rate of return

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Pretax rate of return

Gain on a security before taxes.

Pretax Rate of Return

The rate of return on an investment before capital gains or other taxes. Most of the time, when one sees a calculation of the rate of return it is the pretax rate of return. For a tax-free investment, the pretax and post-tax rates of return are identical.
References in periodicals archive ?
The key variables that determine the breakeven holding period are the pretax rates of return for the annuity and the mutual fund, the taxpayer's tax rate during the accumulation period, the taxpayer's tax rate at the time the annuity is shed out, whether the annuity's earnings are subject to the 10% penalty ta:x, (see the sidebar on pages 74-75 for a summary of income tax rules affecting annuities) and the annual charges imposed on an annuity in excess of those charged a mutual fund with similar risk and return characteristics.
The key variables that determine the breakeven holding period are the pretax rates of return for the annuity and the mutual fund, the taxpayer's tax rate during the accumulation period, the taxpayer's tax rate at the time the annuity is cashed out, whether the annuity's earnings are subject to the 10% penalty tax, (see the sidebar on pages 74-75 for a summary of income tax rules affecting annuities) and the annual charges imposed on an annuity in excess of those charged a mutual fund with similar risk and return characteristics.