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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).
• $80,000 to other shareholders.
1.
|
a. |
How much of the dividend payment did Marathon deduct in determining its taxable income? (Omit the “$” sign in your response.) |
|
Amount deductible |
$ |
|
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
$
|
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
$
ebook & resources
2.
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d. |
Complete Form 1120 Schedule C for Little Rock Corp. to reflect its dividends received deduction. |
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Download the Tax Form and enter the required values in the appropriate fields. |
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Please right click on the PDF link and open the PDF link in a new window. Save your completed Tax Form to your computer and then upload it here by clicking “Browse.” Next, click “Save.” |
3.
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e-1. |
On what line of Little Rock Corp.’s Form 1120 page 1 is the dividend from Marathon Inc. reported. |
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Little Rock Corp will report the $15,000 dividend on Form 1120, page 1, line . |
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e-2. |
On what line of Little Rock Corp.’s Form 1120 is its dividends received deduction reported. |
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Little Rock Corp. will report its $10,500 dividends received deduction on Form 1120, page 1, line . |
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