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Xavier owns shares of a mutual fund. During the year, he received $2,750 in dividend distributions, $800 of which he received in cash. He elected to use the remaining $1,950 to purchase additional shares of the fund. The amount subject to tax is:

Respuesta :

anthougo

The amount of dividend received by Xavier subject to tax is A. $0.

Data:

Dividends received = $2,750

Cash dividend = $800

Stock dividend (additional) = $1,950 ($2,750 - $800)

The law does not subject the reinvested dividends to taxation, especially when the greater portion of the dividends is reinvested in stock.

Answer Options:

A. $0

B. $800

C. $1,950

D. $2,750

Thus, the amount of dividend received by Xavier subject to tax is A. $0.

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