Checkers Corporation Has a Single Class of Common Stock Outstanding

question 4

Essay

Checkers Corporation has a single class of common stock outstanding. Bert owns 100 shares, which he purchased five years ago for $200,000. In the current year, when the stock is worth $2,500 per share, Checkers Corporation declares a 10% stock dividend payable in common stock. Bert receives ten additional shares on December 10 of the current year. On January 25 of next year he sells all ten shares for $30,000.
a)How much income must Bert recognize when he receives the stock dividend?
b)How much gain or loss must Bert recognize when he sells the ten shares he received as a stock dividend?

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Definitions:

Lineage Members

Individuals who are part of a lineage, a group of people descended from a common ancestor, recognized through familial ties and heritage.

Other Lineages

Refers to familial or ancestral lines that are separate from one's own, often used in the context of understanding kinship and descent in anthropological terms.

Foraging Cultures

Societies primarily engaged in the collection, hunting, and fishing of spontaneous food resources.

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Society that is organized and governed by a centralized government, often characterized by stratification and complex social structures.