Julia owns 1,000 shares of Orange Corporation.This year,Orange declared a 10% stock dividend.There was no option for shareholders to receive cash.When Julia received 100 shares of Orange stock,it had a fair market value of $50 a share.How much income does Julia have from the dividend?

Question

Quizplus · Accepted Answer

Stock dividends are generally not taxable as income if they are pro-rata and there is no option to receive cash. Julia's 100 shares received as a stock dividend do not constitute taxable income.

Julia Owns 1,000 Shares of Orange Corporation