A company splits its stock to adjust one of these:
- Amount of shares in the market
- Price of outstanding stock
The company usually gives you more shares of stock for every share you own. These are often referred to as two-for-one or three-for-one stock splits. On rare occasions, a company might have a reverse split and give you fewer shares for each share that you own (Ex: a one-for-two stock split).
If the stock is split two-for-one, you now own two shares for every share you own. The total basis of the stock doesn’t change. Instead, the value of each share changes.
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Adjusted Gross Income is simply your total gross income minus specific deductions. Additionally, your Adjusted Gross Income is the starting point for calculating your taxes and determining your eligibility for certain tax credits and deductions that you can use to help you lower your overall tax bill.