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Marathon Inc

Economics Aug 22, 2020

Marathon Inc. (a C corporation) reported $1,250,000 of taxable income in the current year. During the year, it distributed $125,000 as dividends to its shareholders as follows: (New Corporate income tax rate has been mentioned as "21% on all taxable income" as per the recent change. Leave no answer blank. Enter zero if applicable.)
• $6,250 to Guy, a 5 percent individual shareholder. • $18,750 to Little Rock Corp., a 15 percent shareholder (C corporation). • $100,000 to other shareholders.
a. How much of the dividend payment did Marathon deduct in determining its taxable income? b. Assuming Guy's marginal ordinary tax rate is 37 percent, how much tax will he pay on the $6,250 dividend he received from Marathon Inc. (including the net investment income tax)? c. What amount of tax will Little Rock Corp. pay on the $18,750 dividend it received from Marathon Inc. (50 percent dividends received deduction)? (Round your final answers to the nearest whole dollar amounts.)

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