An article in last Sunday's Business section gave an incorrect formula for determining how owners of "old," predivestiture shares of American Telephone & Telegraph Co. could figure the cost of their new telephone company shares for tax purposes this year.
A shareholder should start with the original cost of the old AT&T shares and divide that by the number of shares owned. That gives the cost per share of old AT&T. Then, that number is multiplied by the following factors to give the cost basis per share for the new AT&T and each of the seven operating companies split off from AT&T:
New AT&T 0.286743/Ameritech 0.103988/Bell Atlantic 0.105539/Bell South 0.136165/Nynex 0.99034/Pacific Telesis 0.83073/Southwestern Bell 0.95481/U S West 0.89976
As a final step, multiply the result for each of the seven operating companies (but not the new AT&T) by 10 to get the cost basis per share (a stockholder gets 10 shares of each regional operating company for each 100 shares of old AT&T).
Thus, if the cost of old AT&T was $60 a share, the cost basis of new AT&T would be $60 times 0.286743, or $17.20. The cost basis of Ameritech would be $60 times 0.103988, or $6.24, multiplied by 10, or $62.40 a share.