taxpayer received the following during 2021: A $7,000 eligible dividend, a $2,000 non- foreign dividend (before withholding tax) of $500. The withholding tax rate was 10%. T arginal tax rate of 30%. How much dividend income will the taxpayer report in 2021? O a. $9,500

taxpayer received the following during 2021: A $7,000 eligible dividend, a $2,000 non- foreign dividend (before withholding tax) of $500. The withholding tax rate was 10%. T arginal tax rate of 30%. How much dividend income will the taxpayer report in 2021? O a. $9,500

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter1: Federal Income Taxation—an Overview

Section: Chapter Questions

Problem 43P

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

A taxpayer received the following during 2021: A $7,000 eligible dividend, a $2,000 non-eligible dividend, and
a foreign dividend (before withholding tax) of $500. The withholding tax rate was 10%. The taxpayer has a
marginal tax rate of 30%. How much dividend income will the taxpayer report in 2021?
O a. $9,500
O b. $11,366
O c. $12,460
O d. $2,850

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