Tracy and lance equal shareholders in macaw corporation, Ask an Expert

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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?

$300,000

$500,000

$600,000

None of the above

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91796481

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