Tappan Declared a 100 Percent Stock Distribution to All Shareholders

question 48

Essay

Tappan declared a 100 percent stock distribution to all shareholders of record on May 2 of this year. Prior to the distribution, Tappan reported current E&P of $60,000 and accumulated E&P of $30,000. Prior to the split, Barb owned 100 shares of Tappan stock, with a market value of $150 per share and a tax basis of $100 per share. After the distribution, Barb owned 200 shares of Tappan, with a market value of $80 per share. What is the per-share tax basis of Barb's additional 100 shares?

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Definitions:

Foreign Intelligence Surveillance Court

A federal tribunal created to review and grant warrants for surveillance on foreign espionage agents within the United States requested by federal law enforcement and intelligence bodies.

Terrorism

The use of violence and threats to intimidate or coerce, especially for political purposes.

Warrants

Financial securities that grant the holder the right to buy shares of a company at a fixed price until the expiry date.

Exclusionary Rule

A legal principle in the United States that prevents evidence collected or analyzed in violation of the defendant's constitutional rights from being used in a court of law.