AT&T
TAX INFORMATION
AT&T Corp. distributed its shares of Lucent
Technologies common stock to AT&T shareowners on September 30, 1996, as
expected. AT&T and Lucent Technologies are now two fully independent,
publicly owned, global companies. This document contains information related to
the special distribution of the Lucent Technologies shares:
| An explanation of the tax implications for AT&T shareowners as
the result of the Lucent Technologies spin-off. |
| A worksheet that will help you complete important tax calculations.
|
BACKGROUND
INFORMATION
AT&T shareowners of record on
September 17, 1996, received a distribution of .324084 shares of common stock of
Lucent Technologies for every share of AT&T stock owned. Full shares of
Lucent Technologies should have been received on or about September 30. As
previously announced, shareowners entitled to a fractional share of Lucent
Technologies will receive a cash payment instead. The check contained in this
package represents this cash payment. The fractional shares of Lucent
Technologies common stock have been aggregated and sold through an independent
agent, with the net proceeds being paid as appropriate to those entitled to a
fractional share.
TAX INFORMATION
AT&T
received a ruling from the Internal Revenue Service that the distribution of
Lucent Technologies common stock qualifies as a tax-free distribution for
federal income tax purposes in the United States. This means that, in general,
an AT&T shareowner will not recognize a gain or loss related to the receipt
of Lucent Technologies shares, except in connection with cash received in lieu
of a fractional share. The taxable gain or loss that must be recognized for
income tax purposes will be equal to the difference between the cash received
and shareowner's tax basis in the fractional share (you can determine your tax
basis using the worksheet that follows).
TAX BASIS ALLOCATION
It is necessary to determine your "tax basis" to calculate your net gain or loss on the sale of stock. This tax basis is then compared to the sale price of that stock to determine your net gain or loss. If you bought your shares (and did not acquire them as a gift or in a similar fashion), "tax basis" refers to your cost of acquiring your shares of stock. If you did not acquire your shares by purchasing them, consult your tax advisor to determine your tax basis. Because of the spin-off, you must divide—or allocate—the tax basis of your pre-spin-off AT&T shares between your post-spin-off AT&T shares and your newly received Lucent Technologies shares. (The worksheet that follows will help you do this). If you acquired pre-spin-off AT&T shares at different times and costs (including shares received through a dividend reinvestment plan), you will need to calculate a separate tax basis for each group of AT&T shares, as well as the Lucent Technologies shares received in connection with these AT&T shares.
Inquiries concerning your Lucent account should be
directed to: 1-888-LUCENT6
Or write to:
Lucent Shareholders Services
C/O The Bank of New York
Church Street Station
P.O. Box 11009
New York, NY 10286-1009
E-mail:
lu-shareholders-svcs@email.bony.com
CONSULT YOUR TAX ADVISOR
The information in this document represents our
understanding of federal income tax laws and regulations, and does not
constitute tax advice. It does not purport to be complete or to describe the
consequences that may apply to particular categories of shareowners. You should
consult your own tax advisor regarding the particular consequences of the stock
distribution, including the applicability and effect of any state, local foreign
tax laws.