Marathon Inc. (a C corporation) reported $1,000,000 of taxable income in the current year. During the year, it distributed $100,000 as dividends to its shareholders as follows:

$5,000 to Guy, a 5 percent individual shareholder.

$15,000 to Little Rock Corp. a 15 percent shareholder (C corporation).

$80,000 to other shareholders.

a. How much of the dividend payment did Marathon deduct in determining its taxable income

Amount deductible $ 0

b. Assuming Guy s marginal ordinary tax rate is 35 percent, how much tax will he pay on the $5,000 dividend he received from Marathon Inc.

Amount deductible $ 750

c. Assuming Little Rock Corp. s marginal tax rate is 34 percent, what amount of tax will it pay on the $15,000 dividend it received from Marathon Inc. (70 percent dividends received deduction)

Amount deductible $ 1,530

Attachment:- Dividend.rar