Bonds in Tax-exempt and Stocks in Taxable Account

[VWJETTY]

I know this is what it says, and I’ve read the text like a million times. But why is this? Thanks.

[Flashback]

This may be solution in Flat and Heavy Tax regime with high interest tax and low or no capital gain tax. Another possibility is tax loss harvesting what is more likely done with stocks.

[VWJETTY]

Oh I see,

Offsetting equity loses in the taxable account w/ gains in the taxable account so it mitigates taxes due…

[pachstar]

@VWJETTY

I know this is what it says, and I’ve read the text like a million times. But why is this? Thanks.

Bonds pay coupons, coupons get taxed --> tax exempt account

Stocks generally have price appreciation, not taxed till you liquidate --> taxable account

[Flashback]

@pachstar

@VWJETTY

I know this is what it says, and I’ve read the text like a million times. But why is this? Thanks.

Bonds pay coupons, coupons get taxed --> tax exempt account

Stocks generally have price appreciation, not taxed till you liquidate --> taxable account

Yep. And if capital gain taxes are high and you’re a day trader it wouldn’t be reasonable choice. This is not “black and white” binary choice solution. It depends on many factors such as tax regime, frequency of trading and current tax environment as well as expectations of future tax rates.

#AskAccountant

[VWJETTY]

Makes sense.

Yeah, I’ve always somewhat struggled a little with the tax and have seen multiple question just related to this so thanks for clearning it up a little. Hopefully it don’t come up Saturday but if it does, at least i’ll have a fighting chance. A small one, but it’s still better than nothing