Tara Corporation was an industrial farm owned and operated by the O'Hara family.
Mr And Mrs O'Hara owned of the common stock with a basis of $ and
their daughter, Scarlet, owned the remaining with a basis of $ Tara
declares and distributes a stock dividend of newly authorized nonvoting preferred
shares valued immediately after the distribution at $ million. Mr And Mrs O'flara
receive $ worth and Scarlet receives $ worth of the preferred
shares. Immediately after the preferred stock distribution, the total value of the
common shares outstanding is also $ million. Assume that the corporation has
sufficient & to cover any distribution falling under the rules.
Question points
The stock dividend described above is taxable.
True
False
