When new stock received as a dividend is identical to the old stock on which the dividend is declared, the adjusted basis of the old stock must be apportioned among the shares of old stock and the shares of new stock received as a dividend.

Question

Quizplus · Accepted Answer

When identical stock is received as a dividend, the adjusted basis of the old stock must be apportioned among the shares of old and new stock. This is known as a stock dividend.

When New Stock Received as a Dividend Is Identical to the Old