Question
George owns 2,000 shares of ABC Corporation's common stock and 5,000 shares of Brightstar mutual fund. George elects to participate in Brightstars dividend reinvestment plan,
George owns 2,000 shares of ABC Corporation's common stock and 5,000 shares of Brightstar mutual fund. George elects to participate in Brightstars dividend reinvestment plan, reinvesting his annual dividends and capital gains in additional Brighstar shares. George receives a $5,000 distribution from ABC and form 1099-DIV indicates that $4,000 of the distribution is a dividend and $1,000 is a return of capital. He also receives form 1099-DIV from Brightstar mutual fund indicating that he has a dividend of $8,000 and a capital gain distribution of $2,000 for a gross distribution of $10,000 that is reinvested in 90 additional shares of Brightstar mutual fund. How much does George include in his gross income for the year? Question 4 options: 1) $5,000 2) $14,000 3) $12,000 4) $15,000
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