Nontaxable stock dividends result in no change to the total basis of the old and new stock, but the basis per share decreases.

Name: Nontaxable stock dividends result in no change to the total basis of the old and new stock, but the basis per share decreases.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Nontaxable stock dividends do not result in any change to the total basis of the old and new stock because no actual cash is received. However, the basis per share decreases because the total basis is spread out over a larger number of shares.

Nontaxable Stock Dividends Result in No Change to the Total