Confusing Term. TDA

The nation of Pensacola is best described as having a flat and heavy tax regime. Which of the following assets would be most appropriate for Pensacola investors using a TDA?

Anyone anticipate for this kind of Qs in real exam?

TDA = Tax Deferred Account if i’m not mistaken. I wouldn’t expect acronyms to be used, where did you get this question from?

It is from Qbank 2012.

Man I hope they aint gonna show up.

TDA is very frequently used in the CFAI Text book. So I do not see that as a problem.

Flat and heavy means that there is favorable treatment for dividends, but not interest and capital gains - so you’d want to place growth assets and assets that generate interest income into a tax deferred account.

Seems like a fair question to me.

darkstar , flat and heavy means favorable treatment for dividends and capital gains . and unfavorable treatment of interest income.

Are you sure about that?

Yes I am sure

  1. CFAI Book 2 STUDY SESSION 4 PRIVATE WEALTH MANAGEMENT (page 80 of 236 — printed page 236) Column 7 ( last one )
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right, since cap gain and divys are taxed more than int income, you want to put them in the TDA…

Page 236 states that dividends and capital gains are taxed at ordinary rates whereas interest is taxed at a favorable rate…

sorry misread whole post…

sorry my bad , I meant the opposite of what I wrote . Div and Cap gains are taxed unfavorably while int income is taxed favorably .

I was trying to correct darkstar when he wrote:

“favorable treatment for dividends, but not interest and capital gains”

( cap gains is part of the heavy like dividends , not the not so heavy , like interest )