Ms. Shaver, who has a 32 percent marginal tax rate on ordinary income, owns Benbow Inc. preferred

Question:

Ms. Shaver, who has a 32 percent marginal tax rate on ordinary income, owns Benbow Inc. preferred stock in her investment portfolio. Her Form 1099 reported that she earned $19,580 qualified dividend income on her Benbow investment. Compute her income tax on this dividend assuming that:

a. On the basis of Ms. Shaver's instruction, Benbow made a $19,580 direct deposit into her bank account.

b. On the basis of Ms. Shaver's instruction, Benbow reinvested the dividend in additional Benbow shares.

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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