(1) Cash dividend (2) Stock dividend (3) Property dividend (4) Liquidating dividend ABC Corp. was dissolved and liquidating dividends were declared…

The question

(1) Cash dividend (2) Stock dividend (3) Property dividend (4) Liquidating dividend ABC Corp. was dissolved and liquidating dividends were declared and paid to the stockholders. What tax consequence follows? (2013 Bar Question)

1. A.ABC Corp. should deduct a final tax of 10% from the dividends.
2. B.The stockholders should declare their gain from their investment and pay income tax at the ordinary rates.
3. C.The dividends are exempt from tax.
4. D.ABC Corp. should withhold a 10% creditable tax.

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