Reference no: EM133076670
Question 1 - Twin Turbines Corp., a Delaware corporation, has 200,000 shares that are issued and outstanding. Twin Turbines Corp. had a banner year in 2021, earning over $1 million in profits. To reward shareholders, the Twin Turbines Corp. board of directors declared and paid a $1 dividend per share to each of its shareholders.
Energy Solutions Inc., a corporation organized in Maryland, owns 1,000 shares of Twin Turbines and receives a dividend of $1,000. Which of the following is true about Energy Solutions Inc.'s $20,000 distribution from Twin Turbines Corp.?
a) The entire distribution is subject to U.S. tax
b) 30% of the distribution is subject to U.S. tax
c) 50% of the distribution is subject to U.S. tax
d) None of the distribution is subject to U.S. tax
Question 2 - Clear Water Inc., a corporation organized in Vermont, owns 190,000 shares of Twin Turbines Corp. and receives a dividend of $100,000. What is the U.S. tax on Crystal Water's dividend from Twin Power?
a) The entire distribution is subject to U.S. tax
b) 30% of the distribution is subject to U.S. tax
c) 50% of the distribution is subject to U.S. tax
d) None of the distribution is subject to U.S. tax
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