PROBLEM On June 1, Publicly Held Corporation's common stock is selling for $15 per share. On...

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PROBLEM On June 1, Publicly Held Corporation's common stock is selling for $15 per share. On that date, Publicly Held declares a dividend of $1 per share, payable on June 12 to shareholders of record as of June 8. Investor Corporation purchases 1,000 shares of Publicly Held common stock for $15,000 on June 3 (two days before the June 5 ex-dividend date), collects a $1,000 dividend on June 12 and sells the stock for $14,000 on June 15. (a) What are the tax consequences to Investor Corporation? (b) What result in (a), above, if Investor sold the stock on December 1, instead of June 15? (c) What result in (b), above, if Publicly Held had paid a second $1 per share dividend on August 15, and the ex-dividend date was August 5? (d) What result in (c), above, if the August dividend is $2 per share but Investor holds the Publicly Held stock for 25 months before selling it? 121 I.R.C. § 301(e)(1). 122 I.R.C. § 301(e)(2). 1984 Act General Explanation, supra note 120, at 183. The results reflect the assumed lower corporate tax rate. PROBLEM On June 1, Publicly Held Corporation's common stock is selling for $15 per share. On that date, Publicly Held declares a dividend of $1 per share, payable on June 12 to shareholders of record as of June 8. Investor Corporation purchases 1,000 shares of Publicly Held common stock for $15,000 on June 3 (two days before the June 5 ex-dividend date), collects a $1,000 dividend on June 12 and sells the stock for $14,000 on June 15. (a) What are the tax consequences to Investor Corporation? (b) What result in (a), above, if Investor sold the stock on December 1, instead of June 15? (c) What result in (b), above, if Publicly Held had paid a second $1 per share dividend on August 15, and the ex-dividend date was August 5? (d) What result in (c), above, if the August dividend is $2 per share but Investor holds the Publicly Held stock for 25 months before selling it? 121 I.R.C. § 301(e)(1). 122 I.R.C. § 301(e)(2). 1984 Act General Explanation, supra note 120, at 183. The results reflect the assumed lower corporate tax rate.

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Youve presented a scenario involving tax consequences concerning dividends and stock trading for Investor Corporation Ill address each part of the problem a What are the tax consequences to Investor C... View the full answer