Brad owns 100 shares of AAA Corporation with a basis of $6,000 and a FMV of $24,000.Brad receives 15 stock rights as a nontaxable distribution with a total FMV of $6,000.Brad allows the stock rights to expire.Brad's loss recognized and the basis of the original 100 shares after expiration of the stock rights is
A)$0 and $4,800.
B)$0 and $6,000.
C)($1,200)and $4,800.
D)($1,200)and $6,000.

Question

Quizplus · Accepted Answer

Since the stock rights were received as a nontaxable distribution and were allowed to expire, no loss is recognized, and the basis of the original 100 shares remains unchanged at $6,000.

Brad Owns 100 Shares of AAA Corporation with a Basis