Bob Owns 100 Shares of ACT Corporation Common Stock with a Basis

question 34

Multiple Choice

Bob owns 100 shares of ACT Corporation common stock with a basis of $3,500 and a FMV of $12,000.Bob receives 10 stock rights as a nontaxable distribution,and no basis is allocated to the stock rights.With each stock right,Bob may acquire one share of stock for $25.Bob exercises all 10 stock rights.The total basis of the newly acquired stock is

• A)$0.
• B)$250.
• C)$350.
• D)$1,200.

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Definitions:

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Jargon

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