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

To: w0z who wrote (3433)	6/5/2000 9:31:00 AM
From: rairden	Read Replies (1) \| Respond to of 4722

Thanks, Bill, for your clarification on that cost basis calculation. That Agilent Spin-Off Information Statement was a little confusing. Here's how I'm treating my 2/13/96 purchase of 100 shares HWP at 89 7/8. My cost basis including commission was $9042.50. The split on 7/16/96 turned these 100 shares into 200 shares. Following your format of assumptions, I'm thus starting with: * 0.3814 shares Agilent distributed per old HWP share. * HWP_wi June 2 closing price = 111 * Agilent June 2 closing price = 81 3/4 * Original number of HWP shares = 200 *** Original cost basis of 200 HWP shares = $9042.50 I'm to receive 0.3814 x 200 = 76.28 shares of Agilent. So, upon distribution after Friday's close, I have: 200 shares of HWP worth $111.00 x 200 = $22200.00 76.28 shares of Agilent worth $81.75 x 76.28 = $6235.89 Sum of these positions = $28435.89 The way I think about it is to simply reallocate my $9042.50 cost basis into numbers that give the same ratio as $22200:$6235.89. That is: $9042.50 x (22200.00/28435.89) = $7059.51, new basis for HWP. $9042.50 x (6235.89/28435.89) = $1982.99, new basis for Agilent. New per-share basis for HWP is $7059.51/200 = $35.29755 New per-share basis for Agilent is $1982.99/76.28 = $25.99620 They say there's a check in the mail for 0.28 share of Agilent, 0.28 x $81.75 = $22.89. This will go on my Schedule D as a 6/2/00 sale of 0.28 shares of Agilent acquired on 2/13/96 at a basis of 0.28 x $26.00 = $7.28, for a long-term capital gain of $22.89 - $7.28 = $15.61. That leaves me with 76 shares and no fractions of Agilent at a basis of $1982.99 - $7.28 = $1975.71. I'll welcome any corrections -- usual disclaimers apply.