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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Definitions:

Indifference Curves

Graphical representations in microeconomics showing all combinations of goods that provide equal satisfaction to a consumer.

Gloves

Hand-worn garments intended to protect the hands from various conditions such as cold, heat, damage, or contamination.

Optimal Choice Point

In decision theory and economics, the point at which the decision maker achieves the best possible outcome under given constraints.

Budget Constraint

The limitations on the consumption bundles that a consumer can afford given their income and the prices of goods and services.