On July 7,2010,Brad Received Nontaxable Stock Rights with a Fair

question 193

Multiple Choice

On July 7,2010,Brad received nontaxable stock rights with a fair market value of $4,000.His adjusted basis in the stock is $20,000.Which of the following is correct?

• A)If the fair market value of the stock is $25,000,Brad must allocate part of the stock basis to the stock rights.
• B)If the fair market value of the stock is $30,000,Brad does not have to allocate part of the stock basis to the stock rights.
• C)If the fair market value of the stock is $27,000,Brad does not have to allocate part of the stock basis to the stock rights,but he may elect to do so.
• D)Only a.and b.are correct.
• E)a. ,b. ,and c.are correct.

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Definitions:

Storage Location

A specific area in memory or on a storage device where data is kept.

RAM

Random Access Memory, a type of computer memory that can be accessed randomly and is used for storing working data and machine code.

Reflective

Pertaining to a surface or material that sends back light, heat, or sound without absorbing it, often used in screen technology or safety equipment.

Touch Screen

A display screen that detects and responds to touch gestures, allowing users to interact directly with what is displayed.