If a Distribution of Stock Rights Is Taxable and Their

question 131

True/False

If a distribution of stock rights is taxable and their fair market value is less than 15 percent of the value of the old stock, then either a zero basis or a portion of the old stock basis may be assigned to the rights at the shareholder's option.

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Definitions:

Executory Contract

A contract yet to be performed; a contract at the stage when an agreement has been made but before performance is due.

Example

A representative instance or case used to illustrate a principle, pattern, or procedure.

Executed Contract

A fully performed contract; a contract at the stage when both parties have performed or fulfilled their obligations.

Example

An illustration or instance used to explain or support a statement or principle.