Wonder Corporation Declared a Common Stock Dividend to All Shareholders

question 69

Multiple Choice

Wonder Corporation declared a common stock dividend to all shareholders of record on September 30, 20X3. Shareholders will receive three shares of Wonder stock for each five shares of stock they already own. Diana owns 300 shares of Wonder stock with a tax basis of $90 per share (a total basis of $27,000) . The fair market value of the Wonder stock was $180 per share on September 30, 20X3. What are the tax consequences of the stock dividend to Diana?

• A) $0 dividend income and a tax basis in the new stock of $180 per share
• B) $0 dividend income and a tax basis in the new stock of $67.50 per share
• C) $0 dividend income and a tax basis in the new stock of $56.25 per share
• D)$10,800 dividend and a tax basis in the new stock of $180 per share

---

Definitions:

Separation Anxiety

A disorder characterized by excessive fear or anxiety about separation from home or an attachment figure.

Emotional Distress

A state of emotional suffering typically triggered by stressful situations, characterized by feelings of anxiety, depression, or trauma.

Adult Caregiver

An individual, typically an adult, who provides care for another person who is unable to care for themselves due to illness, disability, or age.

Attachment Figure

A person who provides emotional support and security for an individual, typically a caregiver or parent, to whom a child forms a strong emotional bond.