Question
El Toro Corporation declared a common stock distribution to all shareholders of record on June 30, 20X3. Shareholders will receive 1 share of El Toro
El Toro Corporation declared a common stock distribution 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 380 shares of El Toro stock with a tax basis of $66 per share. The fair market value of the El Toro stock was $106 per share on June 30, 20X3. What are the tax consequences of the stock distribution to Raoul?
A. $0 dividend income and a tax basis in the new stock of $66 per share.
B. $20,140 dividend and a tax basis in the new stock of $106 per share.
C. $0 dividend income and a tax basis in the new stock of $106 per share.
D. $0 dividend income and a tax basis in the new stock of $44 per share.
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
