Cowboy Inc. owns 40% of Bronco Inc., both Cowboy and Bronco are corporations. Bronco pays Cowboy a dividend of $10,000 in the current year. Bronco also reports financial accounting earnings of $20,000 for that year. Assume Cowboy follows the general rule of accounting for investment in Bronco. What is the amount and nature of the book-tax difference to Cowboy associated with the dividend distribution (ignoring the dividends received deduction)?

Group of answer choices

$2,000 favorable.

$10,000 unfavorable.

None of the choices are correct.

$2,000 unfavorable.

$10,000 favorable.