Question $4$ of $15.$

Niraj received Form $1099-$DIV, reporting $$800$ in dividends for $2021.$ He had previously elected to have these dividends reinvested. Which of the following statements regarding the reinvested dividends is TRUE?

The reinvested dividends are $\_\_\_\_\_\_\_\_\_\_.$

Not taxable on his $2021$ return, but the new shares purchased increase his basis in the stock.

Not taxable until the stock is sold.

Taxable on his $2021$ return and increase his basis in the original shares.

Taxable on his $2021$ return, and his basis in the new shares is the share price at the time those additional shares are purchased.