Question

When stock is sold after the date of declaration but before the record date, the buyer must recognize as income the dividend declared.

a. True
b. False

Answer 1

The statement that the buyer must recognize as income the dividend declared if the stock is sold after the date of the declaration but before the record date is false. Dividends are assigned based on the stock's ownership on the record date.

Step-by-step explanation:

When stock is sold between the date of declaration and the record date, the buyer does not need to recognize as income the dividend declared. This statement is false. Dividends are typically assigned to shareholders based on the ownership of the stock on the record date, not the date of declaration or the date of sale. Therefore, even if the stock is sold before the record date, the seller of the stock during that interval would still be entitled to the dividend, not the buyer.