This is a relatively rare event. If the company or your broker notifies you that you received a taxable stock dividend, you should rely on information from the company or from a tax professional to determine your basis. These events are usually non-taxable, but change the number of shares you own and the basis of those shares. A stock dividend is generally declared in terms of a percentage. A stock split is usually declared as a fraction.
Stock splits can occur at odd fractions.
Determining Your Basis When you receive additional shares as a result of a non-taxable stock dividend or split, your total basis in your stock remains the same. The basis is divided among the shares you already owned and the new shares in proportion to the value of the shares. In the usual case, where the new shares are exactly the same as the old ones, the value is the same, and basis is allocated equally to each share. You receive 40 additional shares and now own a total of 440 shares. You are treated as if you held the new shares as long as you held the old shares.