Replies to post #3425 on Marathon Digital Holdings Inc (MARA)

[cgraut]

Sometimes, the company issues a stock dividend instead of a split. To know if this is the case, look at the announcement for the split. It will read something like, "The company will effect the stock split in the form of a stock dividend." In this case, the par value of the stock and number of shares remains the same, but the contributed capital account increases, paid for by a decrease in the retained earnings account. In a stock dividend situation, your basis is adjusted downward depending on the amount of new stock received and the original basis of the stock originally owned. For instance, for a 25% stock dividend, if you had 200 shares at $40 each, your new basis would be $32 each for 250 shares ($8,000/250). This works out to the inverse of the new number of shares. That is, you now have 125% of the shares you started with (250/200), at 80% of the price each (32/40). - See more at: http://wiki.fool.com/Stock_split#sthash.RtTFTkRb.dpuf