Did any of you own Avaya (formerly Lucent) shares?

[fineleg]

I had some Lucent shares, which became Avaya a while back, and in 2007 since a private acquisition of Avaya happened, the shares were paid off. Meaning, even if you did not sell the shares explicitly through your broker, they were "sold" and you were paid money. So, now it has to be reported as a capital gain/loss on tax return. Does anyone know the cost basis calculation for this? bought Lucent-->becomes Avaya-->price they paid for ur shares to liquidate them in 2007?

[yoda]

not an expert, but shouldn't cost be what you paid?

[fineleg]

not an expert' date=' but shouldn't cost be what you paid?[/quote'] Normally yes. If u buy 100 shares at price X and sell it after few years - in simplest case, yes cost basis is 100*X But with stock splits (X becomes X/2), and conversions (when X/2 shares are converted into Y+fixed amt, where Y is a ratio used when Lucent spins off into Avaya),and then ... it can be a bit tricky. there is this "fractional shares" etc.

[fineleg]

Ok, found this: http://investors.avaya.com/stockinfo/cost_basis.shtml FOR SHAREHOLDERS WHO ACQUIRED THEIR AVAYA STOCK FROM THE LUCENT SPIN-OFF, SEPTEMBER 30, 2000: Understanding Cost Basis You must determine your "cost basis" (also called "tax basis") to calculate your net gain or loss when you sell stock. This cost basis is then compared to the sale price of the stock to determine your net gain or loss. If you bought your shares (and did not acquire them as a gift), "cost basis" refers to your cost of acquiring your shares of stock. If you received your shares as a gift, please consult your tax advisor to determine your cost basis. Because of Avaya's spin-off from Lucent, you must divide — or allocate — the tax basis of your pre-spin-off Lucent shares between your post-spin-off Lucent shares and the Avaya shares you received on September 30, 2000. The tax worksheet will help you calculate your cost basis. 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). Tax Information Lucent received a ruling from the Internal Revenue Service that the distribution of Avaya common stock qualifies as a tax-free distribution for federal income tax purposes in the United States. This means that, in general, Lucent shareowners will not recognize a gain or loss related to the receipt of Avaya 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 the shareowner's tax basis in the fractional share. Use the tax worksheet to determine your tax basis. More on the Lucent Spin-off Lucent Technologies Inc. distributed its shares of Avaya Inc. common stock to Lucent shareowners on September 30, 2000, as expected. Lucent and Avaya are two fully independent, publicly owned companies. Lucent shareowners of record on September 20, 2000, received a distribution of 1 share of common stock of Avaya for every 12 shares of Lucent stock owned. The distribution was made on September 30, 2000. Fractional shares of Avaya's common stock were not distributed. Fractional shares held by holders of record were aggregated and sold in the public market by the Bank of New York. The aggregate net proceeds of these sales were distributed ratably to those shareholders who would otherwise have received fractional shares. CALCULATING COST BASIS FOR OTHER SHAREHOLDERS: Understanding Cost Basis You must determine your "cost basis" (also called "tax basis") to calculate your net gain or loss when you sell stock. This cost basis is then compared to the sale price of the stock to determine your net gain or loss. If you bought your shares (and did not acquire them as a gift), "cost basis" refers to your cost of acquiring your shares of stock. If you received your shares as a gift, please consult your tax advisor to determine your cost basis. To Determine Your Cost Basis Contact Avaya's transfer agent, The Bank of New York, at 1-866-22AVAYA (1-866-222-8292) or 1-212-815-3700 (Must Use Company Code 8267 When Prompted); or go to the Avaya Stock Quote and History section. Enter your purchase and sell dates to calculate your cost basis. -------------------------------------------------------------------------------- Download the Cost Allocation Tax Worksheet (PDF, 10KB) Download the IRS Statement of Spin-off (PDF, 4KB)

[fineleg]

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 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 Oct. 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). 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 Lucent shares. If you bought Lucent on more than one occasion, you will need to perform this computation separately for each purchase. HYPOTHETICAL EXAMPLE In this example, 100 shares of Lucent were purchased at $30 per share, resulting in a tax basis of $3,000. Because the Avaya distribution ratio was .083333 of a share of Avaya for each Lucent share owned, the holder receives 8 whole shares of Avaya, as well as a check for .3333 of a share. The original $3,000 tax basis must now be allocated to the post-spin-off Lucent shares and to the newly received Avaya shares. 94.524% of the $3,000 will be allocated to Lucent and 5.476% allocated to Avaya. LUCENT TAX BASIS CALCULATION $3,000 x .94524 = $2,835.72. This is the new total tax basis for Lucent shares. To get the tax basis per share divide $ 2,835.72 by 100, the total share amount. $2,835.72 divided by 100 = $ 28.3572 per share. Example: $3,000 x .94524 = $2,835.72 ÷ 100 = $28.3572 Original total tax basis x Allocated ratio = New total Lucent tax basis ÷ Total number of shares = New Lucent per share tax basis Calculate your new Lucent per share tax basis here: x .94524 = ÷ = Original total tax basis x Allocated ratio = New total Lucent tax basis ÷ Total number of shares = New Lucent per share tax basis AVAYATAX BASIS CALCULATION $3,000 x .05476 = $164.28. This is the total tax basis for Avaya shares. To get the tax basis per share divide $164.28 by 8.3333, the total share amount. $164.28 divided by 8.3333 = $19.7137 per share. Example: $3,000 x .05476 = $164.28 ÷ 8.3333 = $19.7137 Original total tax basis x Allocated ratio = New total Avaya tax basis ÷ Total number of shares = New Avaya per share tax basis Calculate your new Avaya per share tax basis here: x .05476 = ÷ = Original total tax basis x Allocated ratio = New total Avaya tax basis ÷ Total number of shares = New Avaya per share tax basis AVAYA FRACTIONAL SHARE TAX BASIS Example: $19.7137 x .3333 = $6.57 New Avaya per share tax basis x Number of fractional shares sold = Tax basis for fractional shares sold Calculate your Avaya fractional share tax basis here: Example: x = New Avaya per share tax basis x Number of fractional shares sold = Tax basis for fractional shares sold LOSS OR GAIN FROM SALE OF FRACTIONAL SHARES Example: $16.26* – $6.57 = $9.69 Amount of fractional share check – Tax basis for fractional shares sold = Loss/gain from fractional share sale Calculate your loss/gain from fractional shares sale here: Example: – = Amount of fractional share check – Tax basis for fractional shares sold = Loss/gain from

[fineleg]

The undersigned, a shareowner owning common shares of Lucent Technologies Inc. as of the September 20, 2000 record date, received a distribution as of September 30, 2000, from Lucent Technologies Inc. of shares of common stock of Avaya Inc., a corporation controlled by Lucent Technologies Inc. to which Section 355 of the Internal Revenue Code of 1986, as amended (the “Code”), applies. 2. The names and addresses of the corporations involved are: (a) Lucent Technologies Inc. 600 Mountain Avenue Murray Hill, NJ 07974 (b) Avaya Inc. 211 Mount Airy Rd. Basking Ridge, NJ 07920 3. The undersigned surrendered no stock or securities in Lucent Technologies Inc. in connection with the distribution. 4. The undersigned received _____________ whole shares of common stock of Avaya Inc. in the distribution. 5. Lucent Technologies Inc. has received a private letter ruling from the Internal Revenue Service to the effect that the distribution of shares of Avaya Inc. common stock qualifies as a tax-free distribution under Section 355 of the Code. ____________________________________ Shareowner Signature

[yoda]

Normally yes. If u buy 100 shares at price X and sell it after few years - in simplest case, yes cost basis is 100*X But with stock splits (X becomes X/2), and conversions (when X/2 shares are converted into Y+fixed amt, where Y is a ratio used when Lucent spins off into Avaya),and then ... it can be a bit tricky.

I see. :D

[dial_100]

Finey... Long time ago I had worked on the Capital Gain tax computation for SBBillimoria and priceWaterhouse & co... I dont recall much of how we did all this but some girl helped me code this for them. She had explained to me all the BRs which we implemented for them. It was sometime in 1997-1999. I am all out of touch with these things.... but I think the way you have split your cost to arrive at the tax basis for two sets of equities looks right to me... GOOOD :two_thumbs_up:.