AAA Corporation distributes an automobile to Alexandria,a shareholder,in lieu of a cash dividend.Alexandria must report the value of the automobile as dividend income.

Question

Quizplus · Accepted Answer

According to IRS regulations, when a corporation distributes property (including an automobile) to a shareholder in lieu of a cash dividend, the value of the property is treated as a dividend and must be reported as income on the shareholder's tax return.

AAA Corporation Distributes an Automobile to Alexandria,a Shareholder,in Lieu of a Cash