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

question 81

Essay

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 ($200,000 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:

Water Transport

The movement of water and solutes across a plant, from roots to leaves, through the xylem and phloem, essential for nutrient distribution and photosynthesis.

Ionic Bond

A chemical bond formed between two ions with opposite charges through the transfer of electrons from one atom to another.

Hydrogen Bond

A feeble attachment formed between two molecules due to the electrostatic pull between a proton in one molecule and an atom with a high affinity for electrons in the other.

Covalent Bond

A covalent bond is a chemical bond formed when two atoms share one or more pairs of electrons, strongly binding them together in a molecule.