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Technology Stocks : HWP -- Hewlett Packard -- Ignore unavailable to you. Want to Upgrade?

To: dbernoulli who wrote (3411)	4/9/2000 7:24:00 AM
From: w0z	Read Replies (1) \| Respond to of 4722

From FAQ on: hp.com 6. How do I calculate the cost basis of the Agilent shares I will receive following the distribution? An Information Statement will be mailed to each HP shareowner of record in early May. Included in this packet will be information to assist you in determining the cost basis of your shares.

To: dbernoulli who wrote (3411)	4/10/2000 11:38:00 AM
From: David E. Taylor	Read Replies (1) \| Respond to of 4722

dbernoulli: I researched this Q with my broker, tax lawyer and accountant because of the COMS/PALM distribution that I'm also involved in. Your original cost basis in HWP will be divided between your HWP and A holdings after distribution in a ratio that will be determined based on the closing prices of HWP and A the day before A shares are distributed and the final distribution ratio. Possibly a several day average of closing prices will be used instead of the day before close. So whatever the total $$ value of your HWP is on the day before distribution, that's what the total $$ value of your HWP+A will be the next day before trading starts. To use your example, say you have 100 shares of HWP with a cost basis of $70, total basis $7000. Say also that HWP and A close the day before D-day at their current prices of $153 and $115, and that the distribution ratio is 0.37. Your 100 HWP shares at $153 will be deemed to be 37 A at $115 and 100 HWP at $110.45 ($153-$42.55, where $42.55=0.37x$115), total value $15,300, same as 100 HWP at the $153 close. Your $7000 basis will be divided into $5053 for the 100 HWP ($7000x110.45/153) and $1947 for the 37 A ($7000x42.55/153). Important for longer term holders of HWP is that for tax purposes, you will be deemed to have held your A shares for as long as you've held your HWP shares. So if your holding period for HWP is 12 months or more on D-Day, you can sell your A and qualify for the LT cap gains rate. This is based on the info I've collected and my discussions with my broker, accountant and tax lawyer. Check this with your own tax advisor/accountant of course. David T.