We cannot copy and quote posts that contain tagged code without removing all indentation. Makes quoting code useless and difficult, unless there is a user friendly way we should know via mental osmosis that has not yet been documented.
I wouldn't say it's by design, but it certainly falls out of how Markdown and our code detection algorithm work. The two conspire (possibly unintentionally) to make it impossible to have quoted code tags.
Markdown can handle quoted code tags with a little manual tweaking of the autoquote feature, but our code detection algorithm pukes on it because of the leading quote starter on the line.
It actually is intentional on my part because a HUGE pet peeve of mine when we were with the vBulletin system was people quoting long bodies of code. The Markdown language doesn't allow this, and when deciding to go with that syntax, I actually saw that as a plus instead of a negative.