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

question 74

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 these.

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Definitions:

Balanced Experiment

An experimental design where all groups or treatments have an equal number of subjects, minimizing bias and variability.

Factorial Experiment

An experimental setup that studies the effects of two or more factors across multiple levels for each factor.

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Individuals who have completed a degree program at a college or university.

Bar Graph

A graphical representation of data using rectangular bars to show the magnitude of values or frequencies.