Just how common are dividend distributions in today’s economic climate?
Are dividends concentrated in the companies traded on the New York Stock Exchange, or do closely held corporations pay dividends with the same frequency and at the same rates?
Did dividends decrease during the financial downturn of 2008 and 2009? Financial institutions and observers are acutely interested in these issues.
Search for comments on such questions at various commercial websites as well as one or two academic journals or newsgroups.
The stock of Hawk Corporation is owned equally by three sisters, Michele, Melanie, and Miranda. Hawk owns land (basis of $250,000, fair market value of $210,000) that it has held for investment for eight years. When Michele’s basis in her stock is $225,000, Hawk distributes the land to her in exchange for all of her shares.
What are the tax consequences for both Hawk and Michele if the distribution is a:
a. Qualifying stock redemption?
b. Liquidating distribution?
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