How much of tracys distribution will be taxed as a dividend

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Reference no: EM13343143

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.

 

Reference no: EM13343143

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