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Loquat Foods Company owns $1.5 million in 12 percent bonds of Solow Electronics Company. It also owns 100,000 shares of preferred stock of Solow, which
Loquat Foods Company owns $1.5 million in 12 percent bonds of Solow Electronics Company. It also owns 100,000 shares of preferred stock of Solow, which constitutes 10 percent of all outstanding Solow preferred shares. In the past year. Solow paid the stipulated interest on its bonds and dividends of $3 per share on its preferred stock. The marginal tax rate of Loquat Company is 36%. What taxes must Loquat pay on this interest and dividend income?
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