During the year, Alva received dividends on her stocks as follows:

a. Alva purchased the Grape stock three years ago, and she purchased the Amur stock two years ago. She purchased the Blaze stock 18 days before it went ex-dividend and sold it 20 days later at a $5,000 loss. Alva had no other capital gains and losses for the year. She is in the 32% marginal tax bracket. Compute Alva’s tax on her dividend income for the year.

b. Alva’s daughter, who is 25 and not Alva’s dependent, had taxable income of $6,000, which included $1,000 of dividends on Grape, Inc. stock. The daughter had purchased the stock two years ago. Compute the daughter’s tax liability on the dividends.

c. Alva can earn 4.5% before-tax interest on a corporate bond or a 4% dividend on a preferred stock. Assuming that the appreciation in value is the same, which investment produces the greater after-tax income?

d. The same as part (c), except that Alva’s daughter is to make the investment.

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Amur Corporation (a French corporation whose stock is traded on an established U.S. securities market) Blaze, Inc., a Delaware corporation Grape, Inc., a Virginia corporation $60,000 40,000 22,000