On May 17, 2021 (!), Apple’s stock is selling for $100/share, and it declares a dividend of $5/share payable on May 31, 2021 to shareholders of record as of May 25, 2021 (also the ex-date). C Corp purchases 1,000 shares (an infinitesimal percentage of Apple) for $100,000 May 20, 2021, and receives dividends of $5,000 on May 31, 2021. 3 days later, C Corp sells its shares for $95,000. Tax related treatment only a. What are the tax consequences to C Corp with respect to the dividend and sale? b. Same basic facts, but C Corp instead retains the shares, receives the dividends, and sells them on July 31, 2021 for $95,000. c. Very briefly (2 or 3 sentences max), what is the tax policy concern with the result in b? d. Same basic facts, but since Apple sold so many new iphones and those creepy itrackers in May, 2021, Apple declared and paid another dividend of $6/share on June 5, 2021 to all shareholders of record on June 1, 2021. Again, assume C Corp retains the shares and sells them on September 30, 2021 for $105,000.
On May 17, 2021 (!), Apple’s stock is selling for $100/share, and it declares a dividend of $5/share payable on May 31, 2021 to shareholders of record as of May 25, 2021 (also the ex-date). C Corp purchases 1,000 shares (an infinitesimal percentage of Apple) for $100,000 May 20, 2021, and receives dividends of $5,000 on May 31, 2021. 3 days later, C Corp sells its shares for $95,000. Tax related treatment only
a. What are the tax consequences to C Corp with respect to the dividend and sale?
b. Same basic facts, but C Corp instead retains the shares, receives the dividends, and sells them on July 31, 2021 for $95,000.
c. Very briefly (2 or 3 sentences max), what is the tax policy concern with the result in b?
d. Same basic facts, but since Apple sold so many new iphones and those creepy itrackers in May, 2021, Apple declared and paid another dividend of $6/share on June 5, 2021 to all shareholders of record on June 1, 2021. Again, assume C Corp retains the shares and sells them on September 30, 2021 for $105,000.
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