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

question 85

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 the above

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Definitions:

Iroquois Confederacy

The Iroquois Confederacy, also known as the Haudenosaunee or Six Nations, was a powerful and sophisticated alliance of native tribes in northeastern North America, known for its significant cultural and governmental contributions.

Glorious Revolution

A coup in 1688 engineered by a small group of aristocrats that led to William of Orange taking the British throne in place of James II.

Slave Trade

The historical trading of enslaved people, primarily from Africa to the Americas, which was a crucial part of the global economic system from the 16th to the 19th century.

African-Americans

Individuals of African descent living in the United States, historically subjected to slavery and discrimination, and have since been integral in shaping American culture and society.