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Explanation
a.
Ms. Shaver's income tax is $2,952 ($19,680 × 15% preferential rate on qualified dividend income).
b.
The income tax is $2,952. Ms. Shaver is in constructive receipt of the dividend income even though it was automatically reinvested in additional
Benbow shares.
Chapter 16 Homework
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Ms. Shaver, a single taxpayer, has $214,000 taxable income, which includes a $19,680 qualified dividend from Benbow, Incorporated.
Use
Tax rates for capital gains and qualified dividends
.
Required:
a.
Compute her income tax on this dividend assuming that on the basis of Ms. Shaver's instruction, Benbow made a $19,680 direct
deposit into her bank account.
b.
Compute her income tax on this dividend assuming that on the basis of Ms. Shaver's instruction, Benbow reinvested the dividend in
additional Benbow shares.
Required A
Required B
Complete this question by entering your answers in the tabs below.
Compute her income tax on this dividend assuming that on the basis of Ms. Shaver's instruction, Benbow reinvested the
dividend in additional Benbow shares.
Required A
Required B
$
Income tax on dividends
2,952
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