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25 February, 17:56

Bugs McGee receives a 25% nontaxable stock dividend (25 shares) of Roberto Corporation common stock with a fair market value on the date of distribution of $1,000. Bugs previously owned 100 shares of Roberto Corporation common stock which he purchased ten years ago for $8,000. a) The basis per share of the 25 shares of Roberto Corporation stock is:b) The new basis per share of the original 100 shares of Roberto Corporation stock is:

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  1. 25 February, 18:24
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    a) The basis per share of the 25 shares of Roberto Corporation stock.

    Basis of stock now distributes over 125 shares. Existing basis is $8,000.

    Basis of 125 shares = 8,000

    Basis of 25 shares = 25 X 8000/125

    = 1,600

    b) The new basis per share of the original 100 shares of Roberto Corporation stock.

    Basis of 100 shares = 100 X 8,000/125

    = 6,400
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