In june of the current year, marigold corporation declares a $4 dividend out of e & p on each share of common stock to shareholders of record on august 1. ellen and tim each purchase 100 shares of marigold stock on july 1. on july 15, ellen also purchases a short position in marigold. tim sells 50 of his shares on august 10 and continues to hold the remaining 50 shares through the end of the year. ellen closes her short position in marigold on october 15. with respect to the dividends, which of the following is correct?

(a) ellen will have $400 of qualifying dividends subject to reduced tax rates and $400 of ordinary income (from dividends paid on the short position of marigold stock).
(b) tim will have $200 of qualifying dividends subject to reduced tax rates and $200 of ordinary income.
(c) all $800 of ellen’s dividends will qualify for reduced tax rates.
(d) all $400 of tim’s dividends will qualify for reduced tax rates.
(e) none of the above

B. Tim will have $200 of qualifying dividends subject to reduced tax rates and $200 of ordinary income

Explanation:

First, Ellen's Stocks Do not Qualify. Why?

It is held that dividends received from stocks that are held in short and long positions are not qualified for reduced tax rates, hence, option A stating that Ellen qualifies for reduced tax rates is wrong. Ellen purchased stock from Marigold Corporation on both short and long positions.

Secondly, Only $200 of Tim's Dividends will Qualify for reduced tax rates and $200 of ordinary income. How?

steering wheels are always situated on the left side of the car.

always drive on the right side of the road.

white lines separate lanes of traffic traveling the same direction.

hashed or broken lines means you may change lanes when it is safe.

solid white lines mean stay in your lane.

yellow lines separate traffic moving in opposing directions.

hashed or broken yellow lines mean you can carefully pass, paying attention to oncoming traffic.

never cross a solid yellow line (or double yellow line).

when turning left at an intersection, pass in front of any cars that are turning left from the opposing direction (do not try to pass behind them).

use the left lane to pass other cars traveling your direction.

do not pass in the right lane unless absolutely necessary.

if you are driving in the far left hand lane and someone would like to pass you, move over to the right lane when it is safe to do so and allow them to pass.

you must always yield to pedestrians.

come to a complete stop whenever you see pedestrians trying to cross the street.

never pass a school bus if it has flashing red lights. wait until the lights have stopped.

be aware of bicyclists. often they share the road with cars and are supposed to also follow general traffic laws.

be particularly careful about driving in cities with bike lanes -- always check before turning that a bike is not coming.

it is mandatory to pull over or stop at an intersection to allow an emergency vehicle to pass you if you see one traveling with lights flashing and/or a siren running.

do not overuse your car horn. horns are used almost exclusively for emergency situations or for when you feel unsafe.

explanation: