Not if the inflation component is tax deferred, you may be only paying taxes on the real spending portion, and inflation portion is reinvested with no tax liability.
In it, I cite exams from 2007 through 2015; in every case where you had to decide which formula to use, they told you, explicitly, whether inflation was taxable or not.
There are many accounts in which you are taxed only on the amount you withdraw. As you will leave the inflation portion of the return in the account, it would not be taxed.
Please be more careful in your answers, especially during this frenzied last week before the exam. You don’t want to do more harm than good.
“. . . dividends and interest are taxed at 20 percent, and capital gains at 15 percent.”
Here, all returns, whether for living expenses or for inflation, are taxable. Add inflation, then increase the sum for taxes.
2009
“. . . a tax rate of 20% [applies] to the . . . withdrawals from the investment account.”
Here, only the withdrawals are taxable; the inflation component will remain in the account, untaxed. Increase the return for taxes, then add inflation.