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 the above statements is true.
Correct Answer:
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