Natasha is a single taxpayer with $100,000 of taxable income.Included in the taxable income is distributions of earnings this year as follows: $$\begin{array} { | l | l | }
\hline \text { CE Corp., a C corporation } & \$ 1,000 \
\hline \text { SE Corp., an } S \text { corporation } & \$ 2,000 \
\hline \text { Paris Corp., a foreign corporation } & \$ 3,000 \
\hline
\end{array}$$ How much of the $6,000 distribution will be taxed at the 15% tax rate?

Question

Natasha is a single taxpayer with $100,000 of taxable income.Included in the taxable income is distributions of earnings this year as follows: $$\begin{array} { | l | l | } 
\hline \text { CE Corp., a C corporation } & \$ 1,000 \
\hline \text { SE Corp., an } S \text { corporation } & \$ 2,000 \
\hline \text { Paris Corp., a foreign corporation } & \$ 3,000 \
\hline
\end{array}$$ How much of the $6,000 distribution will be taxed at the 15% tax rate?

Quizplus · Accepted Answer

The $1,000 distribution from CE Corp., a C corporation, is likely a qualified dividend, which is taxed at the 15% rate for most taxpayers. Distributions from S corporations and foreign corporations typically do not qualify for this rate.

Natasha Is a Single Taxpayer with $100,000 of Taxable Income