Valuing Ma Bell's Family

So you've owned AT&T (T ) since the days of Ma Bell. If you haven't sold any shares along the way, thanks to spin-offs and spin-offs from those spin-offs, you now own varying amounts of 12 companies, including Lucent Technologies (LU ), Qwest Communications (Q ), and, most recently, Comcast (CMCSK ).

Keeping track of all those stocks is hard enough (BW-July 8), but it's a cinch compared with what happens when you sell any of them. A sale is a taxable event, but you don't know whether you made or lost money until you figure out the cost basis. Suppose you bought or inherited 200 shares of AT&T 20 years ago, when it was $66.25 a share. The cost was $13,250 then, but how do you allocate that now to Lucent or Qwest?

Chuck Carlson's AT&T Tax Calculator can help. The CD-ROM ($9.95 at atttaxcalculator.com), has two calculators, Super and Regular. Super would solve the problem described above. Plug in the date and original cost, and you get the AT&T cost basis, adjusted for spin-offs and stock splits, as well as the costs for the spin-off shares, too. In the above example, the cost for Lucent is $817, and $726 for Qwest. The Regular calculator lets you figure the cost basis for each spin-off separately. The software does not take reinvested dividends into account. For that, you would need a record of your dividend-related purchases and then have to plunk in each transaction individually.

Carlson, a financial adviser and investment newsletter publisher, developed the software because of what he heard from his readers. "It has been a train wreck for them taxwise," he says. With the help of this software, investors should be able to get their tax preparation back on track.

By Lewis Braham

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