Not taxable Question 4 of 15. Niraj received Form 1099 - DIV, reporting $800 in dividends for 2021. He had previously elected to have these dividends reinvested. Which of the following statements regarding the reinvested dividends is TRUE? The reinvested dividends are on his 2021 return, but the new shares purchased increase his basis in the stock. Not taxable until the stock is sold. Taxable on his 2021 return and increase his basis in the original shares. Taxable on his 2021 return, and his basis in the new shares is the share price at the time those additional shares are purchased.
Not taxable Question 4 of 15. Niraj received Form 1099 - DIV, reporting $800 in dividends for 2021. He had previously elected to have these dividends reinvested. Which of the following statements regarding the reinvested dividends is TRUE? The reinvested dividends are on his 2021 return, but the new shares purchased increase his basis in the stock. Not taxable until the stock is sold. Taxable on his 2021 return and increase his basis in the original shares. Taxable on his 2021 return, and his basis in the new shares is the share price at the time those additional shares are purchased.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Not taxable
Question 4 of 15. Niraj received Form 1099 - DIV, reporting $800 in dividends for 2021. He had
previously elected to have these dividends reinvested. Which of the following statements
regarding the reinvested dividends is TRUE? The reinvested dividends are
on his 2021 return, but the new shares purchased increase his basis in the stock. Not taxable until
the stock is sold. Taxable on his 2021 return and increase his basis in the original shares. Taxable
on his 2021 return, and his basis in the new shares is the share price at the time those additional
shares are purchased.
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