Kevin Purchased 5,000 Shares of Purple Corporation Stock at $10

Multiple Choice

Kevin purchased 5,000 shares of Purple Corporation stock at $10 per share.Two years later,he receives a 5% common stock dividend.At that time,the common stock of Purple Corporation had a fair market value of $12.50 per share.What is the basis of the Purple Corporation stock,the per share basis,and gain recognized upon receipt of the common stock dividend?

A) $50,000 basis in stock,$10 basis per share for the original stock and $0 basis per share for the dividend shares,$0 recognized gain.
B) $50,000 basis in stock,$9.52 basis per share,$0 recognized gain.
C) $53,125 basis in stock,$10 basis per share for the original stock and $12.50 basis per share for the dividend shares,$3,125 recognized gain.
D) $53,125 basis in stock,$10.12 basis per share,$3,125 recognized gain.
E) None of these.