When stock is sold after the dividend is declared but prior to the record date,the buyer must recognize as income the dividend received,rather than a recovery of the amount of the dividend that is included in the price of the stock.

Question

Quizplus · Accepted Answer

This statement is true. If someone buys stock after the dividend has been declared but before the record date, they are entitled to receive the upcoming dividend payment. However, this dividend income is subject to taxes and must be recognized as income for the buyer. It is not considered a recovery of the amount of the dividend included in the price of the stock.

When Stock Is Sold After the Dividend Is Declared but Prior