Question

Alva received dividends on her stocks as follows.

Amur Corporation (a French corporation whose stock is traded on an established u.S. securities market) $60,000

Blaze, Inc., a Delaware corporation 40,000

Grape, Inc., a Virginia corporation 22,000

a. Alva purchased the Grape stock three years ago, and she purchased the Amur stock two years ago. She purchased the Blaze stock 18 days before it went exdividend and sold it 20 days later at a $5,000 loss. Alva reported no other capital gains and losses for the year. She is in the 32% marginal tax bracket. Compute Alva’s tax on her dividend income.

b. Alva’s daughter, Veda, who is age 25 and who is not Alva’s dependent, reported taxable income of $6,000, which included $1,000 of dividends on Grape stock. Veda purchased the stock two years ago. Compute Veda’s tax liability on the dividends.

Answer 1

Answer:

Given information:

Amur Corporation (a French corporation whose stock is traded on an established u.S. securities market) $60,000

Blaze, Inc., a Delaware corporation 40,000

Grape, Inc., a Virginia corporation 22,000

a)The following table shows Alva's tax on dividend income:

Particulars	Amount	Amount
The amount of tax on qualifying dividends	=($ 60,000+$ 22,000)*0.15 =($ 82,000)*0.15 = $ 12,300	$12,300
The amount of tax on non qualifying dividends	=($ 40,000)*0.32 =$ 12,800	$12,800
Alva's tax on dividend income	= amount of tax on qualifying dividends + amount of tax on non qualifying dividends =$ 12,300 + $ 12,800 =$ 25,100	$25,100

Therefore,

• the Alva's tax on dividend income =$ 25,100

b)

Alva’s daughter, Veda,

veda's tax liability on the dividends = $ 0