Accounting Forum

Subject: 2B2-LS11 What is a primary difference between stock splits and cash dividends?

1.  2B2-LS11 What is a primary difference between stock splits and cash dividends?

Posted 08-22-2017 03:00 AM

Can any body help me to explain why  the answer is 4?
Thanks in advance.
2B2-LS11

What is a primary difference between stock splits and cash dividends?

1.Stock splits are usually paid quarterly; cash dividends are awarded annually.

2.Cash dividends are usually paid quarterly; stock splits are awarded annually.

3.Cash dividends do not result in any taxable gain or loss; stock splits are taxable.

4.Stock splits do not result in any taxable gain or loss; cash dividends are taxable.



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SUNNY

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2.  RE: 2B2-LS11 What is a primary difference between stock splits and cash dividends?

Posted 08-22-2017 10:33 PM
Stock splits are not regularly planned events, and when they do occur, they don't result in a taxable event they just change the per share tax basis. This eliminates 1 - 3 as options leaving you with #4.