Mr. Ratel is the sole owner of a holding company which owns 100 percent of the shares of his operating company that earns only active business income.

Which of the following statements is correct?

Select one: a. Mr. Ratel will receive dividends from the operating company tax free. b. The holding company will receive dividends from the operating company tax free. c. The holding company will pay Part IV tax on dividends received from the operating company. d. Mr. Ratel will receive dividends from the holding company tax free.