Checkers Corporation Has a Single Class of Common Stock Outstanding

question 4

Essay

Checkers Corporation has a single class of common stock outstanding. Bert owns 100 shares, which he purchased five years ago for $200,000. In the current year, when the stock is worth $2,500 per share, Checkers Corporation declares a 10% stock dividend payable in common stock. Bert receives ten additional shares on December 10 of the current year. On January 25 of next year he sells all ten shares for $30,000.
a)How much income must Bert recognize when he receives the stock dividend?
b)How much gain or loss must Bert recognize when he sells the ten shares he received as a stock dividend?

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Definitions:

Political Power

The ability or authority to influence or control the actions and policies of a government or organization.

Ethnocentrism

The belief in the inherent superiority of one's own ethnic group or culture, often at the expense of valuing other groups.

Culturally Adaptive

This term describes the capacity of individuals or groups to change and evolve their behaviors, practices, and beliefs to fit into varying cultural contexts.

Psychological Needs

Essential emotional or psychological requirements for well-being and proper development, including needs for belonging, esteem, and self-actualization.