El Toro Corporation Declared a Common Stock Dividend to All

question 25

Multiple Choice

El Toro Corporation declared a common stock dividend to all shareholders of record on June 30,20X3.Shareholders will receive 1 share of El Toro stock for each 2 shares of stock they already own.Raoul owns 300 shares of El Toro stock with a tax basis of $60 per share.The fair market value of the El Toro stock was $100 per share on June 30,20X3.What are the tax consequences of the stock dividend to Raoul?

• A) $0 dividend income and a tax basis in the new stock of $100 per share.
• B) $0 dividend income and a tax basis in the new stock of $60 per share.
• C) $0 dividend income and a tax basis in the new stock of $40 per share.
• D) $15,000 dividend and a tax basis in the new stock of $100 per share.

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Definitions:

Conscious Awareness

The state of being aware of one's own existence, sensations, thoughts, surroundings, and experiences.

Dissociative Disorders

Mental health conditions that involve disruptions or breakdowns of memory, awareness, identity, or perception.

Sense of Identity

An individual's perception of self, encompassing personal values, beliefs, and personality traits.

Personality Disorders

Mental health conditions characterized by enduring patterns of behavior, cognition, and inner experience that deviate markedly from the expectations of the individual's culture, are pervasive and inflexible, and lead to distress or impairment.