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The corporation declared a common stock dividend of 5% on June 30, 2012.
The first of this amount reduced your basis to zero.You were paid for the fractional-share stock dividend under a plan described in the discussion above.You figure your gain or loss as follows: A corporation that declares a stock dividend may issue you a scrip certificate that entitles you to a fractional share.Distribution of partnership assets can be done as either current distribution or liquidating distribution.A current distribution is when a partnership makes a distribution to the partner(s).
For more information, see chapter 1 of Publication 550. You may not own enough stock in a corporation to receive a full share of stock if the corporation declares a stock dividend.