The recipient of a tax-free stock dividend will have a zero tax basis in the stock.
The recipient must allocate a portion of the basis from existing stock.

Name: The recipient of a tax-free stock dividend will have a zero tax basis in the stock. The recipient must allocate a portion of the basis from existing stock.
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Question

Quizplus · Accepted Answer

The recipient's tax basis in the stock will be equal to the tax basis of the original stock prior to the dividend distribution. No allocation from existing stock is required.

The Recipient of a Tax-Free Stock Dividend Will Have a Zero