Problem
Each event occurs in order:
On January 1, Kent purchased 2,000 shares of Evergrande stock for $40,000.
On March 1, stock issued a 25% stock dividend. fair market value of the stock at the time of the stock dividend was $13 per share.
On April 1, stock issued a $1.50 cash dividend . Kent deposited the dividend in his bank account.
On July 1, Kent sold 40% of his stock. fair market value of the stock at the time of the sale was $18.50.
Task
a) What is the basis per share on April 1?
b) What is the basis of the remaining stock on July 1?
c) What is the gain Kent will report on July 1?
d) What is the total amount of dividends Kent will report for tax this year?