El Toro Corporation Declared a Common Stock Dividend to All

question 25

Multiple Choice

El Toro Corporation declared a common stock dividend to all shareholders of record on June 30,20X3.Shareholders will receive 1 share of El Toro stock for each 2 shares of stock they already own.Raoul owns 300 shares of El Toro stock with a tax basis of $60 per share.The fair market value of the El Toro stock was $100 per share on June 30,20X3.What are the tax consequences of the stock dividend to Raoul?

• A) $0 dividend income and a tax basis in the new stock of $100 per share.
• B) $0 dividend income and a tax basis in the new stock of $60 per share.
• C) $0 dividend income and a tax basis in the new stock of $40 per share.
• D) $15,000 dividend and a tax basis in the new stock of $100 per share.

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Definitions:

Five-Factor Model

A model describing human personality through five broad domains: openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Conscientiousness

A personality trait characterized by thoroughness, a desire to do a task well, and efficiency.

Concern With Aging

The anxiety or worry that arises as one gets older, often related to changes in appearance, health, and functionality.

Identity Certainty

The degree of confidence and clarity an individual has about their own identity, values, and role in society.