Freda Freemont Receives a Nontaxable Stock Dividend of 30 Shares

question 32

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 preferred stock?

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