Rona Owns 3% of Theta Corporation and Has a Basis

question 74

Multiple Choice

Rona owns 3% of Theta Corporation and has a basis of $500 in her stock. During the year, Theta distributes a $40,000 taxable dividend and a $30,000 nontaxable dividend. As a result of the dividend, Rona has

• A)$1,200 of dividend income and a $400 capital gain.
• B)$ 300 of dividend income.
• C)$1,200 of dividend income and a $900 tax free return of capital.
• D)$1,200 of dividend income and no capital gain.
• E)$ 500 capital gain.

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