Stock Splits
Response to the following problem:
Diane owned 100 shares of common stock in the Delta Corporation when it had a two-for-one-stock split. The original 100 shares cost $50 each, for a total cost of $5,000. After the split, Diane had 200 shares that were valued at $30 each, for a total value of $6,000. As a result of the stock split, what is Diane's basis in each share of stock, and how much income must she recognize?