Which of the following is false? A) harvesting losses is always an optimal strategy B) it is generally a better strategy to locate bonds in TDAs and equity in TAs C) as the investment horizon increases, the wealth tax drag also increases
A
A i know is wrong for sure B is meh but sounds true C def true
A
A Not all the time.
B, if TAs means taxable account.
A
correct answer is A
Why is C incorrect?
C is a true statement as the time horizon increases so does the tax drag from wealth tax
because C) is true.
as someone who works with munis, i hate how all bonds are grouped together in these questions. i guess that this is a global exam and from a high level view correct, but it always stinks when you have to leave real world thinking and enter the cfai zone.
A
Can anyone explain why B is true? On the assumption that your tax rate will be lower when you eventually draw from a TDA, why is it ever better to have anything in a taxable account?
rbg3 Wrote: ------------------------------------------------------- > Can anyone explain why B is true? On the > assumption that your tax rate will be lower when > you eventually draw from a TDA, why is it ever > better to have anything in a taxable account? Assuming $0 dividends, if you take a stock and move it from taxable account to a TDA the taxes will be the same. If you take the bond and move it to the taxable account, taxes will have to be paid annually. If you put it in the TDA, taxes only get paid at withdrawal.