Reading 10 prac prob 19 Consider a portfolio that is generally appreciating in value. Active trading is most likely to be least attractive in a
b)Tax deferred account
c)Tax exempt account
Anwer says that active trading would generate annually taxed income and is most appropriate for a tax-exempt account. If a portfolio contains unrealized losses, a certain aount of trading activity is required to harvest tax losses. Tax efficient management of stocks in taxable accounts does not require passive management. It requires passively allowing gains to grow unharvested, but actively realizing losses. But won’t active trading pay taxes in both taxable account and tax exempt account, so why is the answer a?