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For each of the following fact patterns, determine: The income to the shareholders. The...

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Finance

For each of the following fact patterns, determine:

  1. The income to the shareholders.
  2. The basis of the stock.
  3. The effect on the distributing corporation.

On January 15, 20X3, B Co. declared a 5% common stock dividend, payable February 15, 20X3 on all outstanding common stock. This is the only class of stock outstanding. Cash will be distributed instead of fractional shares. During 20X3, this was the only stock dividend and $100,000 of cash was distributed.

C corporation declared a dividend on March 1, 20X3, payable on April 1, 20X3. It is payable in cash unless the shareholder elects, before March 15, 20X3, to take payment in common stock.

D Co. declared a dividend on April 15, 20X3, payable on May 15, @0X3, on its preferred stock. One share of common stock will be paid on each 25 shares of preferred stock held. Fractional shares will be issued.

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