Freda Freemont Receives a Nontaxable Stock Dividend of 30 Shares

question 36

Multiple Choice

Freda Freemont receives a nontaxable stock dividend of 30 shares of preferred stock on her Georgia Corporation common stock. Freda purchased the 200 shares of common stock two years ago for $12,000. On the date of distribution, the fair market value of the common stock was $75 per share and the fair market value of the preferred was $100 per share. What is the new basis, per share, of the common stock?

• A) $75.00
• B) $50.00
• C) $100.00
• D) $66.67

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Definitions:

Agricultural Fertility

The capacity of land to produce abundant crop yields, often influenced by soil quality, climate, water availability, and agricultural practices.

Lightning

A natural electrical discharge of very short duration and high voltage between a cloud and the ground or within a cloud.

Mexica

Indigenous people of the Valley of Mexico, best known as the ruling ethnic group of the Aztec Empire, renowned for their complex society, architecture, and contributions to agriculture.

Aztecs

A Mesoamerican culture that flourished in central Mexico in the 14th to 16th centuries, known for their complex social structure, achievements in art and architecture, and conquered by the Spanish in 1521.