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Case Study 2: Long-Term or Short-TermLenny bought 500 shares of XYZ Corporation stock for $1,500, including his broker's commission. Five years later, XYZ distributed a 2% nontaxable stock dividend (10 shares). Three days after the stock dividend was distributed, Lenny sold all his XYZ stock for $2,030. Is the holding period for Lenny's stock considered short-term or long-term? Click here for an explanation. Although Lenny owned the 10 shares he received as a nontaxable stock dividend for only three days, all the stock has a long-term holding period. Stock acquired as a nontaxable stock dividend has the same holding period as the original stock owned. Because he bought the stock for $1,500 and then sold it for $2,030 more than a year later, Lenny has a long-term capital gain of $530 on the sale of the 510 shares. 
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