Figuring the Basis of AT&T Shares
I need the basis of my ATT stock from 1978. How do I figure that out?
You have quite a big project ahead of you. You can't just subtract your purchase price from the sale price because the company has gone through so many mergers, spin-offs and stock splits over the past 25 years. Because of all of these activities, the basis of ATT's stock is one of the most complicated to figure out. Fortunately, the company's Web site has several calculators and worksheets to help you with the math -- or at least walk you through the process of calculating your cost basis.
The biggest event was the 1984 divestiture, when ATT spun off the seven baby bells. Your basis should be allocated 28.5% to ATT and the remaining 71.5% split among the seven baby bells, with each at a different rate -- from 8.94% for US West to 13.53% for Bell South. (See the worksheet at the ATT Web site to run the numbers).
You'll also have quite a big job whenever you sell any of those baby bell shares because most of those phone companies have gone through their own spin-offs and mergers since 1984. (Those companies' Web sites each has its own calculator to help you figure out the basis when you finally sell those shares.)
The changes didn't stop there. ATT spun off Lucent and NCR in 1996, went through a 3-for-2 stock split in 1999, split off ATT Wireless in 2001, then ATT Broadband spun off and merged with Comcast in 2002. ATT had a 1-for-5 reverse stock split in 2002, then merged with SBC on November 18, 2005. The company's investor relations Web page includes several worksheets to adjust your basis for each of the events.
The Web site also lists the company's historic price data since 1901, which can help you get started if you don't have your purchase records. But those prices have not been adjusted for splits and spinoffs -- for that, you'll need to go through the worksheets.
And that cost basis information doesn't include dividends you may have reinvested, which you've already been taxed on and can use to add to your cost basis and lower your tax bill. For help figuring out your basis for any stock, you can sign up for GainsKeeper, which will calculate the cost basis for you, can import numbers from your brokerage firm or personal finance software (like Quicken or Microsoft Money), and even print out your Schedule D for your taxes. A one-year subscription to GainsKeeper costs $49, but you can get a free trial for 30 days.
For more information about figuring out your basis on any stock or mutual fund -- and not overpaying your capital gains taxes -- see Investor Tax Tips. For more advice about filing your taxes, see Kevin McCormally's Tax Tips column, which runs every weekday until the April 17 deadline. And for help with all aspects of tax filing -- especially if you're scrambling around to finish up this week -- see Last-Minute Tax Tips.
Got a question? Ask Kim at email@example.com.