Arkansas Administrative Code
Agency 006 - Department of Finance and Administration
Division 05 - Division of Revenues
1998-1 - Comprehensive Corporation Income Tax Regulations
Rule 26-51-411 - GAIN OR LOSS - SALES OF PROPERTY
Rule 2.26-51-411 - Sale of Shares of Stock
Current through Register Vol. 49, No. 9, September, 2024
When shares of stock in a corporation are sold from lots purchased at different dates and at different prices and the identity of the lots cannot be determined, the stock sold shall be charged against the earliest purchases of such stock. The excess of the amount realized on the sale over the cost or other basis of the stock will constitute gain.
When a dividend is paid with the stock of the dividend payor, the basis for determining gain or loss from the sale of shares of such stock shall be the difference between the sale price and the quotient (or result) of the cost or other basis of the original shares of stock divided by the total number of the old and new shares.
When common stock is received as a bonus with the purchase of preferred stock or bonds, the total purchase price shall be fairly apportioned between such common stock and the securities purchased for the purpose of determining the portion of the cost attributable to each class of stock or securities. However, should that not be feasible, no profit on any subsequent sale of any part of the stock or securities will be realized until the total cost is recovered from the sale proceeds.
When a corporation issues to its shareholders rights to subscribe to its stock, the value of the rights do not constitute taxable income to a shareholder, although gain may be derived or loss sustained by a shareholder from the sale of such rights. The following rules shall apply:
(1) If the shareholder does not exercise, but rather sells his rights to subscribe, the cost or other basis of the stock with respect to which the rights are issued shall be apportioned between the rights and the stock in proportion to their respective values at the time the rights are issued. The basis for determining gain or loss from the sale of a right or a share of such stock will be the quotient (or result) of the cost or other basis assigned to the right or the stock divided by the number of rights issued or by the number of shares held.
(2) If the shareholder exercises his rights to subscribe, the basis for determining gain or loss from a subsequent sale of a share of the stock obtained through exercising the rights shall be determined by dividing the part of the cost or other basis of the old shares assigned to the rights, including the subscription price of the new shares, by the number of new shares obtained.
(3) If the stock with respect to which the rights are issued was purchased at different times and at different prices and the identity of the lots cannot be determined, or if such stock was purchased at different times and at different prices and the stock rights cannot be identified as having been issued with respect to any particular lot of such stock, the basis for determining the gain or loss from the sale of:
The taxpayer may, at its option, include the entire proceeds from the sale of stock rights in its gross income. The basis for determining gain or loss from the subsequent sale of stock with respect to which the rights were issued shall be the same as though the rights had not been issued.
