Since the stock dividend is taxed, how would that affect my cost basis in ACAS?
Would the stock dividend be treated as a stock split, adjusting the cost basis per share downwards accordingly, but with more shares, that is, total basis still the same for all the shares combined post split? Or will the shares before split still have the same cost basis, and the new shares have a basis of zero?
>>Since the stock dividend is taxed, how would that affect my cost basis in ACAS?
The part of the dividend paid in stock will be added to your basis.
Here is a crude example to illustrate:
You own 2 shares that cost you $1 each. ACAS pays $1.25 in stock on each share and thus gives you one more share. You now have 3 shares. Your cost basis of the 3 shares is $2 (buy cost) plus the distribution value of $2.50 for a total basis of $4.50 or $1.50 per share.
So if later you sell the shares at a profit, you have captured the dividend in cash and not paid tax on it.