If the Stock Received as a Nontaxable Stock Dividend Is

question 54

True/False

If the stock received as a nontaxable stock dividend is not the same type as the stock owned prior to the dividend,the allocation of basis is based on relative fair market values of the stock.

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Definitions:

Equity

The value of an ownership interest in property, including shareholders' equity in a corporation.

Debt

An amount of money borrowed by one party from another, under the condition that it is to be paid back at a later date, usually with interest.

Financial Risk

The possibility of losing money on an investment or business venture.

ROE

Return on Equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.