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Technology Stocks : Compaq
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To: Ashley Campbell who wrote (45146)1/26/1999 9:44:00 AM
From: Lynn  Read Replies (1) of 97611
 
Ashley, your number of CPQ shares remains the same--start with 100 shares, end with 100 shares.

HOWEVER, as a result of the spin-off, we are all going to have to recalculate our cost basis of CPQ shares. This is nothing to be concerned with right now and should be relatively easy because CPQ will be sending instructions on how to do this [with examples] down the line.

The reason we shall have to recalculate the cost basis of CPQ shares is because AV itself will have some value--if we would get shares for "free" [meaning devoid of a cost basis] and down the line sell the shares of AV at say, 15, we would have to pay a capital gain on every penny of the $15 we get for each share. By coming up with a new cost basis for CPQ and one for AV as well, we get "saved" down the line at tax time.

Lynn
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