2010-08-09 15:24:01

The allocation of stock dividends received in year 2005 and after by for-profit enterprises or companies which invest in other domestic profit seeking businesses should be recorded as additional numbers of shares according to the Generally Accepted Accounting Principles. The cost of each share or book value per share should be recalculated based on total number of shares after the distribution of stock dividends. The cost of selling this type of stock dividends should be determined based on the cost of share before the market open or derived from the book value under the Income Tax Act Article 4-1. The same rules apply to the calculation of gains and losses of securities transactions by profit-seeking enterprise under the Income Tax Basic Act Article 7, section 1, item 1 and section 2.