If a nontaxable stock dividend is received and is not the same type of stock as that owned before the dividend,the original stock's basis is allocated to all shares
A)based on the par value of the stock.
B)equally to all shares owned after the stock dividend.
C)based on relative fair market values at the time of the stock dividend.
D)None of the above.

Question

Quizplus · Accepted Answer

C)If the stock received as a stock dividend is not the same type as the stock owned before the dividend,the allocation is based on relative FMVs.

If a Nontaxable Stock Dividend Is Received and Is Not