Two Days Before the Ex-Dividend Date,Drexel Corporation Buys 100 Shares

question 112

Multiple Choice

Two days before the ex-dividend date,Drexel Corporation buys 100 shares of Zebra Corporation stock (less than 1%) for $200,000.Drexel Corporation receives $10,000 of dividends from Zebra Corporation.Two weeks after the ex-dividend date,Drexel Corporation sells the Zebra Corporation stock for $190,000.Which of the following statements is correct?

• A)Drexel Corporation cannot recognize a capital loss.
• B)Drexel Corporation cannot take a dividends-received deduction on the Zebra Corporation dividend.
• C)Drexel Corporation will be allowed a 70% dividends-received deduction when reporting the Zebra Corporation dividend.
• D)Drexel Corporation will receive no dividends-received deduction because the stock was purchased ex-dividend.

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Definitions:

White People

A term used to describe individuals of European descent or belonging to ethnic groups characterized by light skin pigmentation.

Inductor

A passive electronic component that stores energy in a magnetic field when electrical current flows through it.

Current-Limiting

A feature or device designed to limit the maximum current that can flow in an electric circuit, protecting the circuit from damage caused by overcurrent.

Reactance

The opposition to current flow in an AC circuit offered by pure inductance or pure capacitance.