Jupiter Inc

Essay

Jupiter Inc. has 1,800,000 common shares outstanding. Harry Keller acquired 8 percent of these shares at a cost of $11 per share. During the current year, the Company declares an 8 percent stock dividend which it designates as eligible. At this time the shares are trading at $12 per share. The Company transfers the amount of the stock dividend to paid up capital. What are the tax consequences to Harry Keller of this transaction? Your answer should include the adjusted cost base per share of Harry's holding.