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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.


10 out of
10.00 points


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

  Amount deductible 0 correct  


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 correct  


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 correct