A shareholder's basis in property received as a dividend is its fair market value on the date of the distribution.

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According to the Internal Revenue Service (IRS), a shareholder's basis in property received as a dividend is generally its fair market value on the date of the distribution, rather than its cost or the basis of the stock surrendered. This is outlined in IRS Publication 551, Basis of Assets.

A Shareholder's Basis in Property Received as a Dividend Is