For nontaxable stock rights where the fair market value of the rights is 15% or more of the fair market value of the stock, the taxpayer is required to allocate a portion of the stock basis to the stock rights.

Question

Quizplus · Accepted Answer

According to IRS guidelines, if the fair market value of the nontaxable stock rights is 15% or more of the fair market value of the stock, the taxpayer is required to allocate a portion of the stock basis to the stock rights. This allocation is made to determine the basis of the stock rights and any gain or loss realized upon their disposition.

For Nontaxable Stock Rights Where the Fair Market Value of the Rights