With Regard to Stock Dividends, All of the Following Statements

question 61

Multiple Choice

With regard to stock dividends, all of the following statements are correct except:

• A) Stock dividends are distributions made by a corporation of its own stock.
• B) In computing basis for new stock received as a result of a non-taxable dividend, it is immaterial whether the stock received is identical or not to the old stock.
• C) If a stock dividend is taxable, the basis of the old stock does not change.
• D) If a stock dividend is not taxable, a division must be made in the basis between the old and new stock.

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Definitions:

Rent-Seeking Behavior

Activities aimed at gaining financial benefits through manipulation or exploitation of the political or economic environment rather than through trade and production of wealth.

Ballot Measure

A proposal put to a vote of the general public, allowing voters to make direct decisions on legislation or policy issues.

School Funding

The financial resources provided for public schools, typically derived from taxes and allocated by governmental entities to support education.

Constituents

Members or components that form a part of a larger group, or individuals who are represented by elected officials.