A Corp.wants to throw something to its shareholders this year, but is cash poor.The board decides on a two-for-one stock dividend: common on common.The shareholders of record at the time of the dividend

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Quizplus · Accepted Answer

C) Doubling the shares through a stock dividend and allocating the pre-split basis equally among the shares is correct. This action does not immediately affect the total value of the shareholder's investment or result in a taxable event. Instead, it adjusts the basis of the shares, which impacts the calculation of gain or loss when the shares are eventually sold.

A Corpwants to Throw Something to Its Shareholders This Year, but but Is