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From: ijk@hou5e.UUCP (Ihor Kinal)
Newsgroups: net.taxes
Subject: AT&T Stock - IRS Letter - and Selling of Subsidiaries
Message-ID: <1075@hou5e.UUCP>
Date: Tue, 22-Jan-85 13:03:04 EST
Article-I.D.: hou5e.1075
Posted: Tue Jan 22 13:03:04 1985
Date-Received: Thu, 24-Jan-85 05:48:39 EST
Organization: AT&T Information Systems Laboratories, Holmdel, NJ
Lines: 37

Last week, we got our friendly letter from the I>R>S> "reminding"
us that we really received more dividends than AT&T said we did.
(The result of a conflict in interpretation between AT&T's lawyers
and the IRS).  Question is, do we just have to buckle in to the IRS,
or is there a way of fighting it, or at least paying subject to protest
the amount.

The other question I had, is how I treat the sale of some shares
of the subsidiaries.  In teory, it would be a capital gains type of
item, but I'm not sure as to the original price issue. Here's what
I understand, using some numbers that are totally made up just
for the sake of argument and easy math:
 Let's say I paid $1000 for some AT&T stock. Upon the split, 
it was worth $2000.  Then, assume that 10%(200) went into PACTEL.
I sold the PACTEL for 220.  Then I've made a profit of $110
which is reported as a capital gains on my Federal (but as normal
income on my NJ tax, since they don't acknowledge capital gains treatment).

If my analysis is correct, all I need is the original price of the AT&T
stock (which info I hopefully have) and the relative value upon divestiture
(which I believe AT&T sent me) to compute this.  Unfortunately, my
return is more complicated, since the original stock is a result of
AT&T savings plan, with some company contributions!!!!!

Comments, advice, and opinions greatfully accepted.  If your advice
is based upon professional opinion or the successful result of an 
audit [ -) ] or case in Tax Court, all the better, so indicate.
If there's enough response directly to me, I'll try to summarize,
l although I really feel this is a topic of general interest, and
you may want to just follup directly.

Thanx in advance,
Love, (why not, I've been told in net.social or somewhere that it's OK)

Ihor Kinal
hou5e!ijk
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