If a Nontaxable Stock Dividend Is Received and Is Not

question 18

Multiple Choice

If a nontaxable stock dividend is received and is not the same type of stock as that owned before the dividend,the original stock's basis is allocated to all shares

• A)based on the par value of the stock.
• B)equally to all shares owned after the stock dividend.
• C)based on relative fair market values at the time of the stock dividend.
• D)None of the above.

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Definitions:

Somatic Cells

Any cell of the body that makes up the tissues, organs, and parts of the body, excluding the reproductive cells.

Gametes

Reproductive cells (sperm in males and eggs in females) that unite during sexual reproduction to form a new organism.

Chromosomes

Long strands of DNA wound around proteins, located in the cell nucleus, carrying genetic information.

Genotype

Genetic makeup of an individual.