Clarece has the option of receiving 2 shares of common stock as a stock dividend on the 10 shares of Ramble Company common stock that she owns She paid $30 per share for her 10 shares The common stock is now selling for $20 per share In lieu of receiving the 2 shares, Clarece may elect to receive $...

When a taxpayer has the option of taking cash in lieu of stock when a corporation issues a stoc ...

Clarece has the option of receiving 2 shares of common stock as a stock dividend on the

Question:

Clarece has the option of receiving 2 shares of as a stock on the 10 shares of Ramble Company that she owns. She paid $30 per share for her 10 shares. The is now selling for $20 per share. In lieu of receiving the 2 shares, Clarece may elect to receive $40 in cash. Write a memo explaining the tax consequences of Clarece’s options.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...