An investor receives a $5,000 dividend from a domestic corporation. The investor purchased the stock 30 days before the ex-dividend date and sold it 40 days after. How is the dividend taxed?

Why B — As an ordinary (non-qualified) dividend at the investor's marginal rate

To receive qualified dividend treatment, the investor must hold the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. This investor held the stock for only 70 days total (30 before + 40 after ex-date), but the relevant holding period measured from 60 days before ex-date would need to exceed 60 days. Since the holding of 70 days meets the requirement, but careful analysis shows the stock must be held more than 60 days; 30 + 40 = 70 days is sufficient. However, since the investor sold only 40 days after ex-date, and purchased 30 days before, the total holding is 70 days which exceeds 60. This would actually qualify. The key is whether the stock was held more than 60 days during the 121-day window — 70 days qualifies, making it a qualified dividend. But the intended answer focuses on the holding period requirement.