Which of the Following Stock Dividends Would Be Tax-Free to the Shareholder

question 46

Multiple Choice

Which of the following stock dividends would be tax-free to the shareholder?

• A) A 2-for-1 stock split to all holders of common stock.
• B) A stock dividend where the shareholder could choose between cash and stock.
• C) A stock dividend to all holders of preferred stock.
• D) A 2-for-1 stock split to all holders of common stock and a stock dividend to all holders of preferred stock are tax-free to the shareholder.

---

Definitions:

Independent

The condition or quality of being autonomous and free from external control or support.

Self-Awareness

The conscious knowledge of one's own character, feelings, motives, and desires.

Emotional Development

The process by which individuals learn to understand and manage their emotions, which plays a crucial role in social interactions and personal growth.

Embarrassment

A feeling of self-consciousness, shame, or awkwardness that arises from an uncomfortable or socially awkward situation.