At the beginning of the year, Ms. Faro paid $15,000 for 750 shares of Gravois stock. She instructed her broker to reinvest any dividends in additional Gravois shares. Her Form 1099-DIV reported that she earned $820 dividend income which purchased 39 additional shares. Which of the following statements is true?
A) Ms. Faro recognizes no dividend income and has a $15,000 basis in her 789 shares.
B) Ms. Faro recognizes no dividend income and has a $15,820 basis in her 789 shares.
C) Ms. Faro recognizes $820 dividend income and has a $15,820 basis in her 789 shares.
D) None of these statements are true.
Correct Answer:
Verified
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