Swallow,Inc

question 16

Essay

Swallow,Inc.,is going to make a distribution of $900,000 to Marjean who is in the 35% tax bracket.
a.Determine the tax liability to Marjean if the form of the distribution is a dividend.
b.Determine the tax liability to Marjean if the form of the distribution is a stock redemption. Assume Marjean's adjusted basis for the stock redeemed is $250,000 and that she has owned the stock for two years.

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