Rona owns 3% of Theta Corporation and has a basis of $500 in her stock. During the year, Theta distributes a $40,000 taxable dividend and a $30,000 nontaxable dividend. As a result of the dividend, Rona has
A)$1,200 of dividend income and a $400 capital gain.
B)$ 300 of dividend income.
C)$1,200 of dividend income and a $900 tax free return of capital.
D)$1,200 of dividend income and no capital gain.
E)$ 500 capital gain.

Question

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The Answer of Rona owns 3% of Theta Corporation and has a basis of $500 in her stock. During the year, Theta distributes a $40,000 taxable dividend and a $30,000 nontaxable dividend. As a result of the dividend, Rona has
A)$1,200 of dividend income and a $400 capital gain.
B)$ 300 of dividend income.
C)$1,200 of dividend income and a $900 tax free return of capital.
D)$1,200 of dividend income and no capital gain.
E)$ 500 capital gain.

Rona Owns 3% of Theta Corporation and Has a Basis