On pages 19-19 and 19-20 (Section 19-3e), the text explains that stock dividends are generally treated as nontaxable, but that there are exceptions when the dividends are disproportionate; that is, not pro rata. The text does not detail these exceptions.

1. List the exceptions, and give a brief explanation of each.

2. Are there any transactions that do not involve the actual distribution of stock or stock rights, but that are treated as stock dividends and are generally taxable? If so, provide a short description of these transactions.

Cite name and number of the IRS Publication or form where the answer was found.