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Checkers Corporation Has a Single Class of Common Stock Outstanding

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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:

Chiropractic Treatment

A form of alternative medicine that focuses on diagnosing and treating mechanical disorders of the musculoskeletal system, especially the spine.

Spine Manipulation

A therapeutic intervention primarily used by chiropractors to relieve back pain through application of controlled force to the spine.

Complementary Medicine

A range of medical therapies that aren't part of standard medical care but can be used alongside it in the treatment of diseases and health conditions.

Alternative Medicine

Therapeutic practices and treatments that are not typically included in the realm of conventional Western medicine, such as acupuncture, herbal remedies, and homeopathy.

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