The Basics of Basis To truly understand the difficulties behind finding the basis of equity, you must first learn how to calculate the basis of stock basis. The base cost of any investment is simply what you paid, including any fees and commissions. However, complications arise when there have been changes to the stock. These changes include stock splits, stock dividends, reinvested dividends and capital distributions, as well as changes made to the company's structure. The following paragraphs will outline the basic methods permitted by the IRS to calculate cost basis, the history behind AT&T, and the cost basis calculation for AT&T Corp. dating back to its pre-1984 divestiture through the present. Methods for Calculating Cost BasisThe IRS allows for multiple methods for calculating cost basis based on inventory. Allowed methods are security specific identification, first in first out (FIFO), or average basis. The specific stock identification is just what it says; you identify the shares you are selling based on the lot in which you purchased them. With FIFO, the IRS assumes you sold the first shares you purchased. This usually ends up being the least tax-efficient way to sell shares, as share prices rise over time and the first share purchased would have the lowest basis. The IRS also allows you to choose to use the average basis method. This method allows you to take the average number of shares purchased and multiply it by the amount of shares you are selling. To make this election you must send written notice to your account broker or servicer. The following page shows an example of a basic basis calculation for each method. The implications of the basis The importance of determining the true basis of the cost of y...... middle of paper ......0070654341. Retrieved April 14, 2013 http://www3.alcatel-lucent.com/wps/portal/!ut/p/kcxml/04_Sj9SPykssy0xPLMnMz0vM0Y_QjzKLd4w3MfQFSYGYRq6m-pEoYgbxjgiRIH1vfV-P_NxU_QD9gtzQiHJHR0UAAD _z Xg!!/delta/base64xml/L2dJQSEvUUt3QS80SVVFLzZfQV80OEY! http://www.smkinfo.com/DTC%20Pages/Tax%20Basis%20Pages/ncr.htm http://www.cmcsa.com/cost-basis.cfm http://historicalstockinfo.com/attoldfront.html http ://www.fundinguniverse.com/company-histories/lucent-technologies-inc-history/ goes as above (International Directory of Company Histories, Vol 34, St. James Press, 2000 http://www.fundinguniverse.com/ company-histories/ncr-corporation-history/ goes as above (International Directory of Company Histories, Vol 30, St. James Press, 2000Copyright © New Paradigm Resources Group, Inc.2014, All Rights Reserved – Goes with the link belowhttp: // www.nprg.com/Company/1959-att-wireless-services-inc