Tappan Declared a 100 Percent Stock Distribution to All Shareholders

question 48

Essay

Tappan declared a 100 percent stock distribution to all shareholders of record on May 2 of this year. Prior to the distribution, Tappan reported current E&P of $60,000 and accumulated E&P of $30,000. Prior to the split, Barb owned 100 shares of Tappan stock, with a market value of $150 per share and a tax basis of $100 per share. After the distribution, Barb owned 200 shares of Tappan, with a market value of $80 per share. What is the per-share tax basis of Barb's additional 100 shares?

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Definitions:

Breathing

The process of taking air into and expelling it from the lungs, essential to supply the body with oxygen and remove carbon dioxide.

Upright Position

A body posture where an individual stands or sits straight, with the spine aligned vertically.

Diaphragm

A dome-shaped muscular partition separating the thorax from the abdomen in mammals, playing a major role in breathing.

Musculomembranous Wall

The layer composed of both muscle and membrane, often referring to structures within the body such as the digestive tract.