Mr. Lay, who has a 37 percent marginal tax rate on ordinary income, earned a $22,030 dividend

Question:

Mr. Lay, who has a 37 percent marginal tax rate on ordinary income, earned a $22,030 dividend on his investment in Rexford Mutual Fund. Compute the income tax and the Medicare contribution tax on this dividend if his Form 1099 reported that:

a. The entire $22,030 was an ordinary dividend.

b. $17,540 was an ordinary dividend and $4,490 was a capital gain distribution.

c. $6,920 was an ordinary dividend, $10,620 was a qualified dividend distribution, and $4,490 was a capital gain distribution.

Assume the taxable year is 2018.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...

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