Nontaxable stock dividends result in:
A)A higher cost per share for all shares than before the stock dividend.
B)A lower cost per share for all shares than before the stock dividend.
C)An increase in the total cost of the old and new stock combined.
D)A decrease in the total cost of the old and new stock combined.
E)None of these.

Question

Quizplus · Accepted Answer

The basis for the stock is allocated among the original shares and the shares received as a nontaxable stock dividend.Thus,while the total basis does not change,the basis per share decreases.

Nontaxable Stock Dividends Result In