Question
Heather owns 600 shares of Diego Corporation common stock for which she paid $12,000. She receives a nontaxable stock dividend of 60 shares of
Heather owns 600 shares of Diego Corporation common stock for which she paid $12,000. She receives a nontaxable stock dividend of 60 shares of preferred stock on her common stock. The fair market values on the date of distribution of the preferred stock dividend are $60 a share for common stock and $300 a share for preferred stock. What is Heather's basis in the common and preferred shares?
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