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an individual buys 200 shares of Target corporation stock in lieu of receiving quarterly dividends the...

an individual buys 200 shares of Target corporation stock in lieu of receiving quarterly dividends the individual signs and agreement to have dividends reinvested by Target into additional shares of stock the individual does not receive dividend checks so he need not recognize that quarterly dividends for tax purposes true or false

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Answer #1

Ans: False

The dividends reinvested have to be recognized for tax purposes irrespective of the fact that the individual is not receiving dividend checks. The income is still being earned by the individual in the form of dividends and reinvestment of those dividends does not exempt him/her from recognizing them for tax purposes.

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