Townsend Corporation Declared a 1-For-1 Stock Split to All Common

question 48

Short Answer

Townsend Corporation declared a 1-for-1 stock split to all common stock shareholders of record on December 31,20X3.Townsend reported current E&P of $400,000 and accumulated E&P of $1,000,000.The total fair market value of the stock distributed was $500,000.Regina Williams owned 1,000 shares of Townsend common stock with a tax basis of $200 per share ($2,000,000 total).The fair market value of the common stock was $300 per share on December 31,20X3.What is Regina's income tax basis per share in the new and existing common stock she owns in Townsend,assuming the distribution is tax-free?

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Definitions:

Idiopathic Pain

Pain of unknown origin or a condition that arises spontaneously without a clear cause.

Chronic Pain

Long-lasting pain that persists beyond the typical time for healing, often defined as longer than three to six months.

Patient-Controlled Analgesia (PCA)

A system allowing patients to self-administer prescribed amounts of pain medication through a pump.

Arouse

To stimulate or awaken a feeling, interest, or activity.