Inflation and Individual IPS

CFA Level III
#1

Its been discussed here lot but still not sure that while calculating pretax nominal return whether inflation should be taxable or not.

As far as I understand from doing AM mocks.

i: If portfolio returns are tax deferred = calculate Aftertax return, divide by (1-T) then add inflation

ii: If not tax deferred = calculate aftertax return, add inflation THEN divide by (1-T)

Is this correct? Are there any other indications when to use which method?

#2

This competes with immunization rate < YTM for the most asked question of the year.