Carlota Owns 4% of Express Corporation and Has a Basis

question 70

Multiple Choice

Carlota owns 4% of Express Corporation and has a basis of $5,000 in her stock. During the year, Express distributes a $300,000 dividend. As a result of the dividend, Carlota has

• A)$12,000 of dividend income.
• B)$5,000 of dividend income and $7,000 of capital gain.
• C)$7,000 of dividend income and a $5,000 tax-free return of capital.
• D)$5,000 of dividend income, $5,000 tax-free return of capital, and a $2,000 capital gain.
• E)$7,000 capital gain.

---

Definitions:

Socioeconomic Status

Describes an individual's or group's economic and social position based on income, education, and occupation.

Life Course

The sequence of significant events, experiences, and transitions in an individual's life from birth to death.

Ethnicity

A category of people who identify with each other based on shared ancestral, social, cultural, or national experiences.

Midlife Crisis

In some normative-crisis models, stressful life period precipitated by the review and reevaluation of one’s past, typically occurring in the early to middle 40s.