Etta received nontaxable stock rights on October 3, 2014. She allocated $16,000 of the $50,000 basis for the associated stock to the stock rights. The stock rights are exercised on November 8, 2014. The exercise price for the stock is $52,000. What is Etta's basis for the acquired stock?
A) $0.
B) $16,000.
C) $52,000.
D) $68,000.
E) None of the above.

Question

Quizplus · Accepted Answer

Etta's basis for the stock is the allocated basis plus the exercise price, which equals ($16,000 + $52,000) = $68,000.

Etta Received Nontaxable Stock Rights on October 3, 2014