A stock split is similar to a stock dividend in that it results in additional shares of stock outstanding and is nontaxable.

Question

Quizplus · Accepted Answer

A stock split involves the issuance of additional shares of stock to existing shareholders, but in proportion to their current holdings. This results in a decrease in the price per share, making the stock more affordable for investors. Like a stock dividend, a stock split is nontaxable because no actual cash or property is distributed to shareholders.

A Stock Split Is Similar to a Stock Dividend in That