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:

Sexual Pleasure

The enjoyable and satisfying feelings derived from sexual activities.

Frotteurism

A paraphilic interest characterized by a person's sexual arousal from rubbing against a non-consenting person, typically in crowded public places.

Public Locations

Areas or spaces that are accessible to all individuals, including parks, libraries, streets, and public squares, and are often managed by governmental bodies.

Obscene Phone Calls

involve unwanted or unsolicited sexual telephone calls made to harass or intimidate the receiver.