If a taxpayer receives a dividend and immediately reinvests it in the same stock, the dividend is not taxable and does not have to be reported.

Select one:

a$.$ Incorrect: Reinvested dividends are taxable as regular dividends, and the reinvestment is just a capital purchase in the same manner as buying the original stock.

b$.$ Correct: The original dividend is just subtracted from the basis of the new stock for reporting purposes.

c$.$ Partially correct: The dividend is not taxable, but the transfer does have to be reported on the return for tracking.

d$.$ Incorrect: The original dividend is treated as a long$-$term capital gain, and the purchase of the new stock reduces the gain, potentially eliminating it$.$ This whole process is reportable, even if no tax liability results from it$.$

Clear my choice