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JH corporation declares a 10% stock dividend when its stock is selling for $100 per share. As a result of the stock dividend, the per-share
JH corporation declares a 10% stock dividend when its stock is selling for $100 per share. As a result of the stock dividend, the per-share stock value declines to $90.91 (JHs market capitalization remains the same, but it is spread over 10% more shares). Joe owns 100 shares of JH corporation and Joe has a basis of $1,100 for those shares. Joe receives 10 shares as a result of the stock dividend. How does the stock dividend affect Joe? Specifically, determine Joes basis per share.
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