Question
Big Jim owned 100,000 shares. Basis was $ 1 million in these shares. ABC Corp pays a stock dividend 2 shares for every share. Thus,
Big Jim owned 100,000 shares. Basis was $ 1 million in these shares. ABC Corp pays a stock dividend 2 shares for every share. Thus, he will now own 300,000 shares rather than 100,000 shares!
What are the tax consequences (how much taxable income) resulting to ABC Corp? To Big Jim?
What is Big Jims basis per share after receiving this distribution of 200,000 shares?
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Financial Accounting Concepts And Applications
Authors: K. Fred Skousen, James D. Stice, Earl Kay. Stice, W. Steve Albrecht
7th Edition
0538876255, 978-0538876254
