Topex Ltd. owns 62,000 shares of Boron Ltd. While the shares were acquired at a total cost of $372,000 ($6.00 per share), the shares are currently trading at $8.50 per share. Topex wishes to dispose of these shares and, to this end, they declare a non-eligible dividend on August 28, 2020, involving a distribution of Boron Ltd. shares on a pro rata basis to the Topex shareholders.
Determine the effect of paying this dividend on Topex's Net Income For Tax Purposes. In addition, determine the effect of receiving this dividend on an individual who holds 10 percent of the Topex Ltd. shares.

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The Answer of Topex Ltd. owns 62,000 shares of Boron Ltd. While the shares were acquired at a total cost of $372,000 ($6.00 per share), the shares are currently trading at $8.50 per share. Topex wishes to dispose of these shares and, to this end, they declare a non-eligible dividend on August 28, 2020, involving a distribution of Boron Ltd. shares on a pro rata basis to the Topex shareholders.
Determine the effect of paying this dividend on Topex's Net Income For Tax Purposes. In addition, determine the effect of receiving this dividend on an individual who holds 10 percent of the Topex Ltd. shares.

Topex Ltd Owns 62,000 Shares of Boron Ltd