You get a stock dividend when a company pays you a dividend with extra shares of stock instead of cash. You usually don’t need to include these dividends in your taxable income.
When you receive a dividend, the total value (basis) of the stock doesn’t change. Instead, the basis of each share changes.
Stock dividends usually don’t have tax implications until you sell the shares. So, the amount paid in cash for the fractional share is considered taxable income. Report the sale of fractional shares on Form 8949.
To learn more, see the Fractional Shares tax tip.
Learn more about second home tax deductions and taxes on selling a second home with the tax experts at H&R Block.
Generally, a wash sale is what occurs when you sell securities at a loss and buy the same shares within 30 days before or after the sale date. Wash sale rules are designed to prevent investors from creating a deductible loss for the purpose of offsetting gains with only a short interruption in owning the security.
Learn more about nontaxable distributions on Form 1099-Div Box 3 and get tax answers at H&R Block.
Learn more about Form 3921 and incentive stock option rules with the tax experts at H&R Block.