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Showing posts from August, 2018

Are Tax Free Bonds really Tax Free? Yes, Unless.

Are Tax Free Bonds really Tax Free?  Yes, Unless.
I remember about 15 years ago when I first starting studying to take the Stock brokers General License exam.  It was pretty intense, it is a 6 hour exam, that you have to take blindfolded with one arm tied behind your back, with no computer, pen or paper in front of you.  No I am just kidding, everything after 6 hour exam is not true, but it sure felt like it at the time.  It was one of the most difficult exams I had ever taken in my life at the time.  Stocks or equities, which is considered ownership in a company and Bonds, which is debt that one can purchase in exchange for payments, made up most of the 6 hour exam.

To keep this blog very simple and at a high level, Bonds come in primarily two flavors, General Obligation (GO) and Revenue Bonds.  Let’s do a quick review of both so we can find out if Tax Free Bonds really are Tax Free.  To accelerate this explanation, anything to do with Revenue will not be Tax Free so that means that…