A stock dividend differs from a stock split, in that:
A)The amount of a stock dividend is fully taxable, whereas there is no tax implication with a stock split.
B)Stock dividends increase the number shares greater than 25%, whereas stock splits increase shares by less than 25%
C)Stock splits always increase the average share price whereas for stock dividends the price would remain the same
D)Stock splits have an impact on retained earnings, whereas stock dividends have no impact

Question

Quizplus · Accepted Answer

Stock dividends are typically taxable events for the shareholders, as they are considered income. On the other hand, stock splits simply increase the number of shares while proportionally decreasing the price per share, without any immediate tax implications.

A Stock Dividend Differs from a Stock Split, in That