Wilton Corporation has a single class of common stock outstanding. Robert owns 100 shares, which he purchased

Question:

Wilton Corporation has a single class of common stock outstanding. Robert owns 100 shares, which he purchased in 2007 for $100,000. In 2013, when the stock is worth $1,200 per share, Wilton declares a 10% dividend payable in common stock. On December 10, 2013, Robert receives ten additional shares. On January 30, 2014, he sells five of the ten shares for $7,000.

a. How much income must Robert recognize when he receives the stock dividend?

b. How much gain or loss must Robert recognize when he sells the common stock?

c. What is Robert's basis in his remaining common shares? When does his holding period in the new common shares begin?

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... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... 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...