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

question 110

Essay

Townsend Corporation declared a 1-for-1 stock split to all common stock shareholders of record on December 31,year 1.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 ($200,000 total).The fair market value of the common stock was $300 per share on December 31,year 1.What is Regina's income tax basis in the new and existing common stock she owns in Townsend,assuming the distribution is nontaxable?

---

Definitions:

Spirituality

Refers to the belief in something beyond the self, often involving religious or existential exploration, personal growth, and a sense of connectedness to a larger reality.

Positive Stressor

A beneficial form of stress that can lead to personal growth, enhanced performance, and improved health.

Negative Stressor

Any external or internal factor that causes stress, potentially leading to negative health impacts.

Type A

A personality type characterized by competitiveness, urgency, aggression, and an intense drive for achievement.