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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
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 $10,000 unfavorable. None of the choices are correct. $2,000 favorable. $10,000 favorable. $2,000 unfavorable
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