5)

Abey, Inc., owns 5 percent of the common stock in the Sea Company. Abey received $100,000 in dividends

during 2001 on its investment in Sea. What amount will Abey include in taxable income, and what amount will

Sea deduct, respectively?

A)

$30,000

$0

B)

$30,000

$100,000

C)

$70,000

$100,000

D)

$100,000

$100,000

E)

$100,000

$0