Problem: Emerald, a cash-method calendar year single individual, is an experienced and savvyinvestor. She owns shares of stock in several companies and as a rule, only invests inbusinesses that have a consistent pattern of paying cash dividends.
Opal, Ltd. was experiencing some financial difficulties and only paid a small dividend during thefirst quarter of 2019. With respect to her investment in DiamondCo, Inc.,Emerald's May 15purchase date was only seventeen (17) days before the stock's Ex-Dividend date of June 1, 2019.You can assume all shares in the table above representcommon stock interests in the applicablecompanies and that Emerald has not engaged in any related transactions designed to limit herrisk of loss (e.g. no short sales or similarhedges).Primary Issue:Are the dividends received by Emerald Qualified or Non-Qualified?Hint: Startwith IRC §1(h)(11). Also, review IRS Notice 2003-71, I.R.B. 2003-43, 922 and IRS NewsRelease IR-2004-22