As of Jan 1, 2020, Leo and Alice each owned 200 of the 400 shares of stock outstanding in KC, Inc., a C corporation. Each purchased their shares in 2017 at a cash price of $50 per share and an appraisal report indicated that these shares were worth double that amount, or $100 per share, as of Jan 1 , 2020. Leo and Alice are unrelated individuals.

On July 1, Year 1, KC, Inc., repurchased 30 shares of stock from Alice. The company paid Alice $50,000 for her shares. KC Corporation's aggregate earnings and profits were $20,000 as Jan 1, 2020 and $26,000 as of July 1, 2020. The company generated an additional 46,000 of earnings and profits from Jul 2020 through the end f the year 2020. There were no other distributions.

Based on these facts:

a. What amount of dividend income, if any, does Alice report for 2020?

b. What amount of long-term capital gain, if any, does Alice report for 2020?

c. What is Alice's aggregate basis in her remaining 170 shares of Dec 31, 2020?

d. Would you answer to part a above be the same if Leo and Alice had been married to one another? explain your answer

TAX RATES USED THROUGHOUT THE COURSE Ordinary Income Ordinary Loss Carry forward; apply to 80% Carry forward; apply to 80% of future taxable income of future taxable income $3,000 max. net loss; $0 maximum net loss; Capital Gains and Dividends Capitai Losses Carry forward excess indefinitely against future net capital gains Carry back excess 3 years against past net capital gains and carry forward excess 5 years against future net capital gains Note: The above tax rates are rounded for convenience of performing calculations. Actual rates for individuals are: 0 Ordinary Income is taxed at a top federal rate of 37% plus varying state income tax (All taxpayers will be assumed to be in the highest tax bracket.) 0 Capital Gains, if long-term, of a top federal rate of 20% plus net investment income tax of 3.8% plus varying state income tax (The rate applicable to shortterm gains is identical to the rate on ordinary income. All gains will be assumed to be long-term.) o All corporate income is taxed at a top federal rate of 21% plus varying state income tax