Townsend Corporation Declared a 1-For-1 Stock Split to All Common

question 48

Short Answer

Townsend Corporation declared a 1-for-1 stock split to all common stock shareholders of record on December 31,20X3.Townsend reported current E&P of $400,000 and accumulated E&P of $1,000,000.The total fair market value of the stock distributed was $500,000.Regina Williams owned 1,000 shares of Townsend common stock with a tax basis of $200 per share ($2,000,000 total).The fair market value of the common stock was $300 per share on December 31,20X3.What is Regina's income tax basis per share in the new and existing common stock she owns in Townsend,assuming the distribution is tax-free?

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Definitions:

Nazis

Members of the National Socialist German Workers' Party, a far-right political party in Germany led by Adolf Hitler from 1920 to 1945, responsible for the Holocaust and World War II atrocities.

Attitude

A settled way of thinking or feeling about someone or something, typically reflected in a person's behavior.

Explicit

Information or content that is stated clearly and in detail, leaving no room for confusion or interpretation.

Implicit

Implied or understood though not directly expressed; involving attitudes, beliefs, or reactions that are automatic and unconscious.