RST Corporation declared a dividend this year.The dividend was payable in RST stock worth $40 per share, or the shareholders could elect to receive cash of $40.B received stock and C elected to receive cash.B's dividend is nontaxable, whereas C's dividend is taxable.

Question

Quizplus · Accepted Answer

Both B's and C's dividends are taxable. The IRS considers both stock dividends and cash dividends as income, thus both are subject to taxation.

RST Corporation Declared a Dividend This Year