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).• $80,000 to other shareholders. 1.award:10 out of10.00 points a.How much of the dividend payment did Marathon deduct in determining its taxable income? (Omit the “$” sign in your response.) Amount deductible$ 0 b.Assuming Guy’s marginal ordinary tax rate is 35 percent, how much tax will he pay on the $5,000 dividend he received from Marathon Inc.? (Omit the “$” sign in your response.) Amount deductible$ 750 c.Assuming Little Rock Corp.’s marginal tax rate is 34 percent, what amount of tax will it pay on the $15,000 dividend it received from Marathon Inc. (70 percent dividends received deduction)? (Omit the “$” sign in your response.) Amount deductible$ 1,530
Form 1120 (2011)
Page 2
Schedule C Dividends and Special Deductions (see instructions) (a) Dividends
received
(b) %
(c) Special deductions
(a) × (b)
1
Dividends from less-than-20%-owned domestic corporations (other than debt-financed
stock) . . . . . . . . . . . . . . . . . . . . . . . .
2
Dividends from 20%-or-more-owned domestic corporations (other than debt-financed
stock) . . . . . . . . . . . . . . . . . . . . . . . .
3 Dividends on debt-financed stock of domestic and foreign corporations . . . . .
4 Dividends on certain preferred stock of less-than-20%-owned public utilities . . .
5 Dividends on certain preferred stock of 20%-or-more-owned public utilities . . . .
6 Dividends from less-than-20%-owned foreign corporations and certain FSCs . . .
7 Dividends from 20%-or-more-owned foreign corporations and certain FSCs . . .
8 Dividends from wholly owned foreign subsidiaries . . . . . . . . . . .
9 Total. Add lines 1 through 8. See instructions for limitation . . . . . . . .
10
Dividends from domestic corporations received by a small business investment
company operating under the Small Business Investment Act of 1958 . . . . .
11 Dividends from affiliated group members . . . . . . . . . . . . . .
12 Dividends from certain FSCs . . . . . . . . . . . . . . . . .
13 Dividends from foreign corporations not included on lines 3, 6, 7, 8, 11, or 12 . . .
14 Income from controlled foreign corporations under subpart F (attach Form(s) 5471) .
15 Foreign dividend gross-up . . . . . . . . . . . . . . . . . .
16 IC-DISC and former DISC dividends not included on lines 1, 2, or 3 . . . . . .
17 Other dividends . . . . . . . . . . . . . . . . . . . . .
18 Deduction for dividends paid on certain preferred stock of public utilities . . . .
19 Total dividends. Add lines 1 through 17. Enter here and on page 1, line 4 . . . ▶
20 Total special deductions. Add lines 9, 10, 11, 12, and 18. Enter here and on page 1, line 29b . . . . . . . ▶
Form 1120 (2011)
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