Question 43 of 50 n 2016, Carolyn purchased Carolyn\'s new basis in the stock sh

Question

Question 43 of 50 n 2016, Carolyn purchased Carolyn's new basis in the stock shares s two shares of common stock in a technology firm. Carolyn paid 560 for one share and $70 for the next share. Later in the year, the company decilareda 2 for 1 common stock split. The average of four shares at $32 50 a share Two shares al $00 a share and two shares at $70 a share Four shares $130 a share. Two shares at $30 a share and two shanes at $35 a share Mark for folow up Question 44 of 50. taxpayer brings in a Form 1039-8 showing $6,521 in net proceeds from the Septembar 20, 2016, sale of non-covered securities. What are all of the other items you need to know to report the transaction? The datels) the asset was acquired and the asser basis on the sale da Whether tre client sold stocks or muual funds The asset basis on the sale date. The purchase price paid for the securiies Mark for folow up

Explanation / Answer

43. Option d is correct

Two shares at $30 a share and two share at $35 a share.

Explanation:

When we get additional shares due to split, then total basis in stock remains the same. The basis is divided among the shares you already owned and new shares in proportion to the value of shares.

Carolyn own one share with basis of $60 per share. After the stock splits 2 for 1, Carolyn own two shares with a basis of $30 per share.

Carolyn own one share with basis of $70 per share. After the stock splits 2 for 1, Carolyn own two shares with a basis of $35 per share.

After the split, Carolyn have two share with basis of $30 per share and two share with basis of $35 per share.

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