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Basic Question 6 of 8
Which type of bond is exempt from federal income tax?
II. City general obligation bonds
III. State revenue bonds
I. Municipal bonds
II. City general obligation bonds
III. State revenue bonds
User Contributed Comments 7
| User | Comment |
|---|---|
| Gina | with respect to interest; but still subject to federal income tax on capital gains. |
| katybo | I thought they were "generally" exempt not always. |
| Done | Captial gains tax is not federal income tax |
| steved333 | Done is right, although, as the tax code stands today, if those gains are earned in a year or less, cap gains tax is at your marginal bracket. 366+ days= 15%, just like dividends... |
| joywind | So taxable municipal bonds which is subject to federal income tax is not part of municipal bonds? |
| jonan203 | typically, if you buy a bond from the state you live in, they will be triple tax free (federal, state & local) however, if a CA resident purchased a CT muni, he'd have to pay CA income taxes on the interest he receives from the CT muni. |
| dbedford | One form of govt can't tax another |
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Learning Outcome Statements
describe how legal, regulatory, and tax considerations affect the issuance and trading of fixed-income securities
CFA® 2025 Level I Curriculum, Volume 4, Module 2.