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Heather owns 500 shares of Diego Corporation common stock for which she paid $10,000. She receives a nontaxable stock dividend of 50 shares of preferred stock on her common stock. The fair market values on the date of distribution of the preferred stock dividend are $30 a share for common stock and $150 a share for preferred stock. What is Heather's basis in the common and preferred shares? Round any division to two decimal places and use rounded values in subsequent computations. If required, round your final answers to the nearest dollar.

Heather owns 500 shares of Diego Corporation common stock for which she paid $10,000. She receives a nontaxable stock dividend of 50 shares of preferred stock on her common stock. The fair market values on the date of distribution of the preferred stock dividend are $30 a share for common stock and $150 a share for preferred stock. What is Heather's basis in the common and preferred shares? Round any division to two decimal places and use rounded values in subsequent computations. If required, round your final answers to the nearest dollar.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Heather owns 500 shares of Diego Corporation common stock for which she paid $10,000. She receives a nontaxable stock dividend of 50 shares of preferred stock on her common stock. The fair market values on the date of distribution of the preferred stock dividend are $30 a share for common stock and $150 a share for preferred stock. What is Heather's basis in the common and preferred shares? Round any division to two decimal places and use rounded values in subsequent computations. If required, round your final answers to the nearest dollar. Heather's basis for the common stock is $ 2,000 X and $ 1,500 X for the preferred stock.
Transcribed Image Text:Heather owns 500 shares of Diego Corporation common stock for which she paid $10,000. She receives a nontaxable stock dividend of 50 shares of preferred stock on her common stock. The fair market values on the date of distribution of the preferred stock dividend are $30 a share for common stock and $150 a share for preferred stock. What is Heather's basis in the common and preferred shares? Round any division to two decimal places and use rounded values in subsequent computations. If required, round your final answers to the nearest dollar. Heather's basis for the common stock is $ 2,000 X and $ 1,500 X for the preferred stock.
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