Question
Legrone Media, Inc. distributed one share of its preferred stock for each five shares of common stock that its shareholders owned. On the date of
Legrone Media, Inc. distributed one share of its preferred stock for each five shares of common stock that its shareholders owned. On the date of the distribution, the fair market value of the company's common stock was $40.50 per share, and the fair market value of the preferred stock was $22.50 per share. Lyn Vigliotti had 100 shares of common stock that she inherited from her mother. Her mother's adjusted basis in the shares was $10 per share. The fair market value of the shares in her mother's estate was $30 per share. What is Lyn's adjusted basis in her common stock and preferred stock?
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