BAY Ntwks (under House) Message Board

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Technology Stocks : BAY Ntwks (under House)

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To: George A. Roberts who wrote (6939)	8/14/1998 5:40:00 PM
From: Paul Fine	Read Replies (2) of 6980

To all Bay shareholders(also posted on SI NT thread): A tax point: If you missed it in the Bay proxy, be aware that any gains in your new shares of NT stock after the conversion will be considered short-term capital gains for another full year, with the price at conversion being your new cost basis. In other words, for example, if you had sold your Bay(say, with a cost basis of $20) at $37 last month(and had held it for one year at that time), all your gains($17) would have been longterm capital gains. If NT closes at today's price($50+/Bay=$30) when the merger finalizes(est. 9/1) and then rebounds to the equivalent of Bay's earlier $37(NT=$61.67) the next day and you sell, the first $10 of "Bay" profit will be at the lower tax rate for longterm capital gains, but the next $7 will be at the higher shortterm capital gains tax rate. This is true even if you have held your original Bay shares for more than a year. So, even though the merger has been presented as being "tax neutral", that is not entirely true, depending on your investment strategy. Food for thought. Paul

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