Tax Basis Worksheets

Alcatel-Lucent Tax Basis Worksheet

Please click here to download the worksheet for calculating the tax basis for your Alcatel-Lucent American Depositary Shares (ADSs) and/or cash-in-lieu received in the exchange for Lucent common stock.

The merger was intended to qualify as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended, for U.S. federal income tax purposes. As a result, Alcatel Lucent and Lucent believe that you will not recognize gain or loss on the exchange of your Lucent common stock for Alcatel Lucent ADSs, although gain or loss may be recognized upon the receipt of cash in lieu of a fractional ADS. Alcatel Lucent and Lucent cannot assure you that the Internal Revenue Service will agree with the treatment of the merger as a tax-free reorganization. Tax matters are complicated, and the tax consequences of the merger to each Lucent shareowner will depend on the facts of each shareowner's situation. Lucent shareowners are urged to read the discussion set forth in the proxy statement related to the merger under the heading "The Merger – Material U.S. Federal Income Tax Consequences" and to consult their own tax advisors for a full understanding of the tax consequences of their participation in the merger. A copy of the proxy statement was mailed to shareowners prior to the September 7 Lucent shareholder meeting and is also available on the Internet at http://www.sec.gov/Archives/edgar/data/886125/000095012306009919/y20140a1fv4za.htm. The tax discussion begins on page 85.


AT&T Tax Information

AT&T Corp. distributed its shares of Lucent Technologies common stock to AT&T shareowners on September 30, 1996, as expected. AT&T and Lucent Technologies are now two fully independent, publicly owned, global companies. This document contains information related to the special distribution of the Lucent Technologies shares:

  • An explanation of the tax implications for AT&T shareowners as the result of the Lucent Technologies spin-off.
  • A worksheet that will help you complete important tax calculations.

Background information

AT&T shareowners of record on September 17, 1996, received a distribution of .324084 shares of common stock of Lucent Technologies for every share of AT&T stock owned. Full shares of Lucent Technologies should have been received on or about September 30. As previously announced, shareowners entitled to a fractional share of Lucent Technologies received a cash payment instead. The fractional shares of Lucent Technologies common stock have been aggregated and sold through an independent agent, with the net proceeds being paid as appropriate to those entitled to a fractional share.

Tax information

AT&T received a ruling from the Internal Revenue Service that the distribution of Lucent Technologies common stock qualified as a tax-free distribution for federal income tax purposes in the United States. This means that, in general, an AT&T shareowner would not recognize a gain or loss related to the receipt of Lucent Technologies shares, except in connection with cash received in lieu of a fractional share. The taxable gain or loss that must be recognized for income tax purposes will be equal to the difference between the cash received and shareowner's tax basis in the fractional share (you can determine your tax basis using the worksheet that follows).

Tax basis allocation

It is necessary to determine your "tax basis" to calculate your net gain or loss on the sale of stock. This tax basis is then compared to the sale price of that stock to determine your net gain or loss. If you bought your shares (and did not acquire them as a gift or in a similar fashion), "tax basis" refers to your cost of acquiring your shares of stock. If you did not acquire your shares by purchasing them, consult your tax advisor to determine your tax basis. Because of the spin-off, you must divide—or allocate—the tax basis of your pre-spin-off AT&T shares between your post-spin-off AT&T shares and your newly received Lucent Technologies shares. (The worksheet that follows will help you do this). If you acquired pre-spin-off AT&T shares at different times and costs (including shares received through a dividend reinvestment plan), you will need to calculate a separate tax basis for each group of AT&T shares, as well as the Lucent Technologies shares received in connection with these AT&T shares.

How to calculate your tax basis

You can use the following worksheet to calculate the taxable gain or loss for the cash received in lieu of the fractional share of Lucent Technologies. In addition, shareowners who choose to sell either their AT&T or Lucent shares sometime in the future will need to apply the same tax basis allocation to determine taxability on any net gain or loss. Based on the average high and low prices at which AT&T and Lucent Technologies traded on September 30, 1996—as reported for the New York Stock Exchange transactions—72.01 percent of your pre-spin-off tax basis should be allocated to your AT&T shares, and the remaining 27.99 percent should be allocated to your new Lucent Technologies shares (including any fractional share interest). A hypothetical example is provided along with space to fill in your actual numbers. In order to use this worksheet, you will need to know the original tax basis of your pre-spin-off AT&T shares. If you bought AT&T on more than one occasion, you will need to perform this computation separately for each purchase.

Hypothetical example

In this example, 100 shares of AT&T were purchased at $30 per share, resulting in a tax basis of $3,000. Because the Lucent Technologies distribution ratio was .324084 of a share of Lucent Technologies for each AT&T share owned, the holder receives 32 whole shares of Lucent Technologies, as well as a check for .4084 of a share. The original $3,000 tax basis must now be allocated to the post-spin-off AT&T

shares and to the newly received Lucent Technologies shares. 72.01% of the $3,000 will be allocated to AT&T and 27.99% allocated to Lucent Technologies.

AT&T tax basis calculation

$3,000 x .7201 = $2,160.30. This is the new total tax basis for AT&T shares. To get the tax basis per share divide $2,160.30 by 100, the total share amount. $2,160.30 divided by 100 = $21.60 per share.

Example of AT&T tax basis calculation
Original total tax basis $3,000
Allocation ratio .7201
  =
New total AT&T tax basis $2,160.30
Total number of shares 100
New AT&T per share tax basis $21.60
Calculate your new AT&T per share tax basis here
Original total tax basis ___________________
x
Allocation ratio .7201
  =
New total AT&T tax basis ___________________
÷
Total number of shares ___________________
=
New AT&T per share tax basis ___________________

Lucent Technologies tax basis calculation

$3,000 x .2799 = $839.70. This is the new total tax basis for Lucent shares. To get the tax basis per share divide $839.70 by 32.4084, the total share amount. $839.70 divided by 32.4084 = $25.91 per share.

Example of Lucent Technologies tax basis calculation
Original total tax basis $3,000
x
Allocation ratio .2799
  =
New total Lucent tax basis $839.70
÷
Total number of shares 32.4084
New Lucent per share tax basis $25.91
Calculate your new Lucent per share tax basis here
Original total tax basis ___________________
x
Allocation ratio .2799
  =
New total Lucent tax basis ___________________
÷
Total number of shares ___________________
=
New Lucent per share tax basis ___________________

Avaya Tax Basis Calculation

How to calculate your Avaya tax basis

You can use the cost basis worksheet available on Avaya's Web site at http://investors.avaya.com/shareholder/spinoff.html to calculate the taxable gain or loss for the cash received in lieu of the fractional share of Avaya. In addition, shareowners who choose to sell either their Lucent or Avaya shares will need to apply the same tax basis allocation to determine taxability on any net gain or loss.

Based on the average high and low prices at which Lucent and Avaya traded on October 2, 2000—as reported for the New York Stock Exchange transaction—94.524% of your pre-spin-off tax basis should be allocated to your Lucent shares, and the remaining 5.476% should be allocated to your new Avaya shares (including any fractional share interest).

Contact Avaya

Write to
Avaya Shareholder Services
c/o Bank of New York
Church Street Station
P.O. Box 11033
New York, NY 10286-1033

Online
avshareholders@bankofny.com

Phone
1 (866) 22AVAYA


Agere Tax Basis Calculation

How to calculate your Agere tax basis

You can use the cost basis worksheet available at http://www.lsi.com/about/investors/pages/taxinfo.aspx to calculate the taxable gain or loss for the cash received in lieu of the fractional share of Agere. In addition, shareowners who choose to sell either their Lucent or Agere shares will need to apply the same tax basis allocation to determine taxability on any net gain or loss.

Based on the average high and low prices at which Lucent and Agere Class A common stock and Agere Class B common stock traded on June 3, 2002 - as reported for the New York Stock Exchange transaction - the tax allocation percentages are calculated to be as follows:

  • Agere Class A: 0.7136%
  • Agere Class B: 17.5419%
  • Lucent: 81.7445%

Contact LSI Stockholder Services

Write to
LSI Stockholder Services
c/o Computershare Trust Company
P.O. Box 43023
Providence, RI 02940-3023

Send an email
www.computershare.com/contactus

Phone
1-866-243-7347