|
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). |
| • $80,000 to other shareholders. |
1.
award:
10 out of
10.00 points
10 out of
10.00 points
| a. |
How much of the dividend payment did Marathon deduct in determining its taxable income? (Omit the “$” sign in your response.) |
| Amount deductible | $ 0  |
| 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 deductible | $ 750 |
| 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 deductible | $ 1,530 |
