George purchased 100 shares of Gruber Inc. common stock for $30,000 two years ago. During the current tax year, George received a nontaxable preferred stock dividend of 50 shares. George’s preffered s

George purchased 100 shares of Gruber Inc. common stock for $30,000 two years ago. During the current tax year, George received a nontaxable preferred stock dividend of 50 shares. George’s preffered stock had a fair value of $4,000, and the common stock, on which the preferred stock was distributed, had fair market value of $16,000 on the date of distribution. what is George’s tax basis for his preferred stock?

Wiley Corp., a newly-formed calendar-year corporation, had no earnings and profits for the first six months of its tax year, but did have a total of $10,000 of earnings and profits for its entire 2001 calendar-year. During 200, Wiley distributed$12,000 cash to shareholders on April 1, and an additional $8,000 cash to shareholders on October 1. How much of the October 1 distribution will be taxed as a dividend to Wiley’s shareholders?

a. $0

b.$4,000

c.$5,000

d.6,000

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