Question

In January, 20XX a customer buys 100 shares of ABC stock at $50 per share and pays a $2 commission per share. The customer receives $2 in cash dividends during the year. The customer's cost basis in the stock is:

Answer 1

$ 52

Step-by-step explanation:

Given data:

Price of the stock = $ 50

Commission per share = $ 2

Dividends received = $ 2

Now,

the dividends received is not the part of the stock's cost basis, but it is included in the taxable income for the year.

Therefore,

The customer's cost basis in the stock

= Price of the stock + commission per share

or

= $ 50 + $ 2

or

customer's cost basis in the stock = $ 52