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From: hpk@vax135.UUCP (Howard Katseff)
Newsgroups: net.invest
Subject: AT&T Stock Basis Allocation
Message-ID: <723@vax135.UUCP>
Date: Mon, 2-Jul-84 21:12:52 EDT
Article-I.D.: vax135.723
Posted: Mon Jul  2 21:12:52 1984
Date-Received: Tue, 3-Jul-84 03:21:16 EDT
Organization: AT&T Bell Labs, Holmdel, NJ
Lines: 26

The pamphlet describing AT&T Divestiture Tax information describes two
methods for allocating tax basis for the regional BOC shares.

One is the IRS Method.  The other is the Alternative Method.

The pamphlet says that the "IRS has ruled..." to use the IRS method,
but AT&T's counsel says "that while the matter is not free from doubt,"
the Alternative Method should be used.

The two methods differ only by 1.7% in the total basis value, but the
IRS method requires that 8.5% of the basis be declared as income in
1984 instead of the year in which you sell the stock.

Finally, the pamphlet advises that you "should consult a tax advisor on
which allocation method to use and on other federal, state and local
tax considerations, including whether you must disclose the method you
choose."

Can anybody advise which method to use?  The Alternative Method is
simpler and saves me money, but will I get audited?  Will IRS audit all
of the AT&T shareholders who do this wrong (like the hundreds of
thousands of little old ladies who own AT&T stock)?

Howard Katseff
AT&T Bell Laboratories
Holmdel NJ, USA