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Vine Corporation has a single class of common stock outstanding. Tillie owns 1,000 shares, which she purchased five years ago for $120,000. Vine declares a stock dividend payable in 8% preferred stock having a $230 par value. Each shareholder receives one share of preferred stock for ten shares of common stock. On the distribution dateDecember 16 of the current yearthe common stock was worth $437 per share, and the preferred stock was worth $230 per share. On April 1 of the next year, Tillie sells half of her preferred stock for $12,000.

Requirement a. How much income must Tillie recognize when she receives the stock dividend? Tillie will recognize $ 0 in income when she receives the stock dividend. Requirement b. How much gain or loss must Tillie recognize when she sells the preferred stock? (Ignore the implications of Sec. 306.) (Do not round intermediary Selling price Basis of stock Amount recognized $ 12,000 $ 3,000 $ 9,000 $ Requirement c. What is Tillie's basis in her remaining common and preferred shares after the sale? When does her holding period for the preferred shares begin? Tillie's common share basis is and her remaining preferred share basis is . Her holding period for the preferred shares Requirement a. How much income must Tillie recognize when she receives the stock dividend? Tillie will recognize $ 0 in income when she receives the stock dividend. Requirement b. How much gain or loss must Tillie recognize when she sells the preferred stock? (Ignore the implications of Sec. 306.) (Do not round intermediary Selling price Basis of stock Amount recognized $ 12,000 $ 3,000 $ 9,000 $ Requirement c. What is Tillie's basis in her remaining common and preferred shares after the sale? When does her holding period for the preferred shares begin? Tillie's common share basis is and her remaining preferred share basis is . Her holding period for the preferred shares

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