Final answer:
The nontaxable stock distributions to shareholders are those that do not alter the proportionate interests among shareholders, such as a stock distribution of one common share for every common share owned and a stock distribution to all holders of preferred stock.
Step-by-step explanation:
The question relates to the taxability of different types of stock distributions to shareholders. Generally, a stock distribution is considered nontaxable if it does not affect the proportionate interest of any shareholder in the company. This typically includes scenarios where the company issues additional shares to shareholders without changing their relative ownership percentages in the company.
A) A stock distribution of one common share for every common share owned is usually nontaxable because each shareholder maintains their proportional ownership in the company.
C) Similarly, a stock distribution to all holders of preferred stock is often nontaxable if it does not alter the proportionate interest among shareholders or the structure of the stock ownership.
On the other hand, B) a stock distribution where the shareholder could choose between cash and stock might be taxable, as the choice of cash could be considered a dividend distribution.
Therefore, the correct answer is D) Both a stock distribution of one common share for every common share owned by shareholders and a stock distribution to all holders of preferred stock, as these options typically do not alter proportionate interests and are thus nontaxable.