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

question 48

Short Answer

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 ($2,000,000 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:

Schedule

A plan for carrying out processes or events, specifying the times and, optionally, the resources required.

Cycle Times

The total time from the beginning to the end of a process, procedure, or activity, including process and waiting times.

Assembly Line

A manufacturing process in which parts are added as the semi-finished assembly moves from workstation to workstation where the parts are added in sequence until the final assembly is produced.

Task Times

The duration required to complete specific tasks or activities in a process.