If a stock dividend is taxable, the shareholder's basis in the newly received shares is equal to the fair market value of the shares received in the distribution.

Question

Quizplus · Accepted Answer

When a stock dividend is taxable, the shareholder must include the fair market value of the shares received in their income, and this value becomes the basis of the newly received shares for future gain or loss calculations.

If a Stock Dividend Is Taxable, the Shareholder's Basis in the Newly