Tax Answers

February 25, 1994

Here are answers from members of the Maryland Association of Certified Public Accountants to readers' tax questions. The Sun will publish answers through April 15.

Q: While an employee of C&P Telephone, I became eligible, in 1975, to buy AT&T stock at a purchase price about 85 percent of the market value. The purchases continued until Jan. 1, 1984, when AT&T was broken up. At that time I was issued stock in the seven "Baby Bells," which I still hold. During 1993, I sold 156 shares in US West, receiving $7,400. My broker sent me forms 1099-B and 1099-Int covering this transaction.

My question is: How do I determine the amount I should show as gain or profit, since prior to 1984 my AT&T split several times, and these shares were further decreased in value with the Baby Bells, which, since 1984 have also split several times? I have no way of determining what I paid for the shares sold.

A: Instead of documenting your cost with actual documents, you may be able to obtain information from the transfer agent that handles ownership registration and transfers for US West. Or you can contact your broker to look up the stock prices for the period during which you accumulated the stock. The broker also can assist you with the information concerning the stock splits. A CPA can probably locate information provided by the old AT&T that provided instructions on the allocation of cost to the Baby Bells. Don't forget to include any income on which you were taxed, representing the difference between your actual purchase price and the market value at the time.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary. Consult with a tax adviser for specific advice.

Readers may submit questions by phone, mail or fax. Selected questions will be answered in The Sun and The Evening Sun.

To ask a tax question by phone, call Sundial, The Sun's telephone information service, at (410) 783-1800. In Anne Arundel County call 268-7736, in Harford County 836-5028, and in Carroll County 848-0338. Using a touch-tone phone, enter 6120 after the greeting.

Written queries may be sent to TAX QUESTIONS, The Baltimore Sun, Business News Department, 501 N. Calvert St., Baltimore 21278. Fax questions to The Sun's Business News Department at (410) 783-2517.

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