An individual buys 200 shares of Target Corporation stock.In lieu of receiving quarterly dividends,the individual signs an agreement to have dividends reinvested by Target into additional shares of stock.The individual does not receive dividend checks so he need not recognize the quarterly dividends for tax purposes.

Question

Quizplus · Accepted Answer

Reinvested dividends are still considered taxable income, and the individual must report them for tax purposes even if they are not received as cash.

An Individual Buys 200 Shares of Target Corporation Stock