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George purchased 100 shares of Gruber Inc. common stock for $30,000 two years ago. During the current tax year, George received a nontaxable...

George purchased 100 shares of Gruber Inc. common stock for $30,000 two years ago. During the current tax year, George received a nontaxable preferred stock dividend of 50 shares. George's preffered stock had a fair value of $4,000, and the common stock, on which the preferred stock was distributed, had fair market value of $16,000 on the date of distribution. what is George's tax basis for his preferred stock?

Wiley Corp., a newly-formed calendar-year corporation, had no earnings and profits for the first six months of its tax year, but did have a total of $10,000 of earnings and profits for its entire 2001 calendar-year. During 200, Wiley distributed$12,000 cash to shareholders on April 1, and an additional $8,000 cash to shareholders on October 1. How much of the October 1 distribution will be taxed as a dividend to Wiley's shareholders?
a. $0
b.$4,000
c.$5,000
d.6,000

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8491959.docx

1. Basis of old stock (common stock) = $30000
FMV of the common stock = $16000
FMV of preferred stock = $4000
Total FMV of both stocks = $20000
Basis of common stock after the stock dividend
$30000...

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