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Marathon Inc. (a C corporation) reported $1,000,000 of taxable income in the current year. During the year, it distributed $100,000 as dividends to its shareholders as follows:

 
•   $5,000 to Guy, a 5 percent individual shareholder.
•   $15,000 to Little Rock Corp. a 15 percent shareholder (C corporation).
•   $80,000 to other shareholders.
 
 1.
award:
10 out of
10.00 points
 
 
a.

How much of the dividend payment did Marathon deduct in determining its taxable income? (Omit the "$" sign in your response.)


  Amount deductible0 correct  

b.

Assuming Guy’s marginal ordinary tax rate is 35 percent, how much tax will he pay on the $5,000 dividend he received from Marathon Inc.? (Omit the "$" sign in your response.)


  Amount deductible750 correct  

c.

Assuming Little Rock Corp.’s marginal tax rate is 34 percent, what amount of tax will it pay on the $15,000 dividend it received from Marathon Inc. (70 percent dividends received deduction)? (Omit the "$" sign in your response.)


  Amount deductible1,530 correct  

 
  • 8 years ago
  • 5
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