Adam Corporation owns 1,000 shares of common stock of Rosen, Inc, a large publicly traded company listed on a major stock exchange. If Rosen issues a 20 percent stock dividend when the par value is $10 per share and the market value is $70 per share, how much and what type of income should Adam report?
a. $0
b. $2,000 ordinary income
c. $14,000 ordinary income
d. $2,000 ordinary income and $12,000 extraordinary income
A
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