Tracy and Lance, Equal Shareholders in Macaw Corporation, Receive $600,000

question 85

Multiple Choice

Tracy and Lance, equal shareholders in Macaw Corporation, receive $600,000 each in distributions on December 31 of the current year. Macaw's current year taxable income is $1 million and it has no accumulated E & P. Last year, Macaw sold an appreciated asset for $1,200,000 (basis of $400,000) . Payment for one-half of the sale of the asset was made this year. How much of Tracy's distribution will be taxed as a dividend?

• A) $0
• B) $300,000
• C) $500,000
• D) $600,000
• E) None of the above

---

Definitions:

High School

An educational institution for teenagers, typically offering grades nine through twelve or similar, providing secondary education.

Memory

The ability of an organism to store, retain, and subsequently retrieve information.

English Word

A unit of language that is used to express something meaningful, composed of letters and used in the composition of sentences in the English language.

French Equivalent

Refers to a term, phrase, or expression in the French language that has the same meaning as a corresponding term in another language.