Does anyone have any thoughts or know where there is research on companies issues new shares of stock at the same time issuing a stock dividend

Alan

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Alan Moore
www.1stcalltechnology.com

Maybe I don't understand what the question or situation is but it doesn't sound like any problem to me.

Stock sale - A corporation can sell/issue shares of stock at any time as long as the corporation is selling from its "state authorized unissued stock". In other words the corp at time of setup with the state is authorized to issue say 30,000 shares. They can sell and issue any portion of those 30,000 shares at any time. If they want to issue more they have to go back to the state and get authorization for more shares.

Stock dividends- The corp may issue stock as a dividend to each shareholder as long as they have authorized shares available to issue. An example: say you where authorized 30,000 shares and have issued 500 shares prior therefore you have 29,500 shares still authorized and unissued. Now you want to give a stock dividend of 1 share to each of the present shareholders. You would therefore issue one share to each shareholder and you would now have 1,000 shares outstanding and 29,000 shares still avaliable to sell.

Shareholders stock basis - If the shareholders had originally bought their 500 shares for say $5,000, they would now have 1,000 shares at the cost of $5,000. In other words they original had a cost per share of $10 (5000/500) and after the stock dividend they now have a cost per share of $5 (5000/1000).

No taxable transaction - The corp does not have a taxable transaction when it issues shares of stock. The shareholder has no taxable transaction unless he receives cash or property other than shares of stock.

Cash dividend - If you ment pay a cash dividend from profits to shareholders that would mean a taxable transaction to the shareholder reported on 1040 Sch-B (at a max tax rate of 15%) and zero tax deduction for the corporation (double taxation). not a good thing in many cases.