After a stock split, what is Marlene's new basis for her shares?

To determine Marlene's new basis after a stock split, it's important to understand how stock splits work. A stock split occurs when a company increases the number of its shares outstanding while proportionately decreasing the share price. The total value of the investment remains unchanged; however, the individual share price adjusts according to the split ratio.

If we assume that Marlene originally held two shares with a total basis of $200 (for example, $100 per share). After a 2-for-1 stock split, she would receive four shares. To find the new basis per share, the total original basis remains the same ($200), but it is now divided by the increased number of shares.

For the 2-for-1 split in this case, Marlene calculates her new basis per share as follows:

• Total basis ($200) divided by the new number of shares (4) results in a new basis of $50 per share.

However, if the question intends to reflect a scenario where the total investment is instead broken down into two shares at $35 each and two at $45 each, such a split could be applicable if Marlene's original holding was divided in a specific manner to represent differing values or acquisitions of the stock contributing to varied