Which of the Following Stock Dividends Would Be Tax-Free to the Shareholder

question 46

Multiple Choice

Which of the following stock dividends would be tax-free to the shareholder?

• A) A 2-for-1 stock split to all holders of common stock.
• B) A stock dividend where the shareholder could choose between cash and stock.
• C) A stock dividend to all holders of preferred stock.
• D) A 2-for-1 stock split to all holders of common stock and a stock dividend to all holders of preferred stock are tax-free to the shareholder.

---

Definitions:

MP3 Player

A portable electronic device used to play digital audio files in the MP3 format.

Frontal Lobe

The part of the brain located at the front of each cerebral hemisphere, responsible for higher cognitive functions like decision-making, planning, and voluntary movement.

Brain Injury

trauma to the brain, which can result in temporary or permanent impairment of cognitive, physical, and psychosocial functions.

Personality Changed

The alteration or development in an individual's pattern of thoughts, feelings, and behaviors that makes up their distinct personality over time.