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.

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Definitions:

Motivated

Having a strong willingness or drive to accomplish something or pursue a particular task.

Growth Mindset

The belief that one's talents and abilities can be developed through perseverance, effort, and the process of learning.

Fixed Mindset

The belief that one's abilities, intelligence, and talents are fixed traits that cannot be significantly developed.

Electives

Courses chosen by students, often not required for their major, that allow exploration of interests outside their primary field of study.