Townsend Corporation Declared a 1-For-1 Stock Split to All Common

question 81

Essay

Townsend Corporation declared a 1-for-1 stock split to all common stock shareholders of record on December 31, 20X3. Townsend reported current E&P of $400,000 and accumulated E&P of $1,000,000. The total fair market value of the stock distributed was $500,000. Regina Williams owned 1,000 shares of Townsend common stock, with a tax basis of $200 per share ($200,000 total). The fair market value of the common stock was $300 per share on December 31, 20X3. What is Regina's income tax basis per share in the new and existing common stock she owns in Townsend, assuming the distribution is tax-free?

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Definitions:

Paranoid Personality Disorder

A mental condition characterized by a pervasive distrust and suspicion of others' motives.

Object Relationship Therapy

Object Relationship Therapy is a form of psychotherapy that examines the significance of interpersonal relationships in the formation of self-identity and the impact they have on emotional development and mental health.

Cognitive-behavioral Therapy

A form of psychological treatment that addresses dysfunctional emotions, behaviors, and cognitions through a goal-oriented, systematic process.

Dramatic Personality Disorders

A cluster of disorders characterized by dramatic, emotional, or erratic behavior, including borderline, narcissistic, histrionic, and antisocial personality disorders.