AT&T’s Form 8937 for the April 2022 Warner Bros. Discovery spin-off tells you to keep roughly 76.52% of your original AT&T cost basis with your retained AT&T shares and move roughly 23.48% to the WBD shares you received.1AT&T Investor Relations. AT&T – Attachment to Form 8937 Those two percentages are the whole point of the document. Every other number you need when you eventually sell either stock flows from that split.
The spin-off itself was tax-free under Internal Revenue Code Section 355, so you didn’t owe anything in 2022.2Office of the Law Revision Counsel. 26 USC 355 – Distribution of Stock and Securities of a Controlled Corporation What changed is your basis. Every AT&T shareholder on record as of April 5, 2022, received one SpinCo share per AT&T share, and each SpinCo share was converted into 0.241917 shares of WBD common stock.1AT&T Investor Relations. AT&T – Attachment to Form 8937 Your original AT&T investment now lives in two separate stocks, and until you allocate it between them, you can’t correctly report a gain or loss on either one.
How the Allocation Math Works
AT&T’s Form 8937 attachment set the allocation using the average of the opening and closing prices on April 11, 2022, the first trading day after the distribution. That produced the 76.52% / 23.48% split.1AT&T Investor Relations. AT&T – Attachment to Form 8937
Take a simple example. You bought 100 shares of AT&T at $30, for a total basis of $3,000. After the spin-off:
- Your 100 retained AT&T shares carry $3,000 × 76.52% = $2,295.60, or $22.96 per share.
- Your 24.1917 WBD shares (100 × 0.241917) carry $3,000 × 23.48% = $704.40, or about $29.12 per share.
Your broker delivered 24 whole WBD shares and paid cash for the remaining 0.1917 of a share. The $29.12 per-share basis applies to both the 24 whole shares and the fractional piece.
The Fractional-Share Cash Payment
Cash for the fractional share is treated as if you received the fractional share and immediately sold it. Subtract its basis from the cash paid. In the example, the fractional share’s basis is 0.1917 × $29.12, or about $5.58. If your broker paid you $5.80, you report a $0.22 capital gain on the same forms as any other stock sale.
If You Bought AT&T in Multiple Lots
Run the 76.52% / 23.48% split on each lot separately. If you bought 50 shares at $25 and another 50 at $35, don’t average them into a $30 basis and split once. Do each purchase individually so each lot keeps its own acquisition date and its own per-share basis in both stocks. Your brokerage should track this, but the calculation is easy enough to check.
Your Holding Period in WBD
Under Section 1223, the WBD shares inherit the holding period of the original AT&T stock they came from.3Office of the Law Revision Counsel. 26 US Code 1223 – Holding Period of Property If you bought AT&T in 2018, the WBD shares you received in April 2022 are treated as held since 2018. That matters at sale time because long-term rates (0%, 15%, or 20% for 2026, depending on income) are lower than the ordinary-income rates applied to short-term gains.
Reporting a Sale
When you sell either stock, the sale goes on Form 8949, and totals flow to Schedule D.4Internal Revenue Service. About Form 8949, Sales and Other Dispositions of Capital Assets Use the original AT&T purchase date (not the April 2022 spin-off date), the adjusted basis from the Form 8937 allocation, the sale price, and the resulting gain or loss.
Most brokerages adjusted basis automatically using AT&T’s Form 8937 data, and the Form 1099-B you receive is supposed to reflect that adjustment for covered securities.5Internal Revenue Service. Instructions for Form 1099-B (2026) Automatic isn’t the same as correct. Pull your brokerage’s cost basis for both AT&T and WBD and compare it to your own calculation. If the numbers don’t match, you can report the correct basis on Form 8949 and use a column (f) adjustment code to reconcile. That situation is common after a spin-off and doesn’t trigger an audit on its own.
If You Held AT&T Through Earlier Corporate Actions
The 76.52% / 23.48% split runs against whatever your adjusted basis was on April 8, 2022, which is not necessarily what you originally paid. AT&T went through several transactions that had their own Form 8937 filings. The 2018 merger with Time Warner is the big one: former Time Warner shareholders who received AT&T stock had their basis computed under different rules that factored in cash received in the merger.6AT&T Investor Relations. AT&T Inc Form 8937 – Attachment Regarding Time Warner Inc Merger AT&T also filed a Form 8937 for the DIRECTV transaction.
Each of these adjustments feeds the next. If you skip a link in the chain, everything downstream is wrong. AT&T’s investor relations site archives the earlier Form 8937 attachments. Work through them in order before applying the WBD split.
Shares Held in an IRA or 401(k)
If your AT&T stock sat in a traditional IRA, Roth IRA, or 401(k), the allocation still happens inside the account but has no annual tax consequence. You don’t file Form 8949 or Schedule D for the spin-off. Your custodian handles the split. Basis becomes relevant only if you take a distribution or move shares into a taxable account.
If You Already Sold With the Wrong Basis
If you sold AT&T or WBD shares in 2022, 2023, or 2024 using the wrong basis, file Form 1040-X to correct it. You have three years from the date you filed the original return, or two years from when you paid the tax, whichever is later, to claim a refund.7Office of the Law Revision Counsel. 26 US Code 6511 – Limitations on Credit or Refund For a 2022 return filed in April 2023, that window closes in April 2026.
The error can go either way. Overstating basis means you underreported your gain and owe more tax. Understating basis means you overpaid and are owed a refund. Fixing the record also protects you from the 20% accuracy-related penalty the IRS can impose for a substantial understatement of income.8Internal Revenue Service. Accuracy-Related Penalty
The 2026 WBD Separation Is Coming
Warner Bros. Discovery announced in June 2025 that it plans to split into two publicly traded companies, a streaming and studios business and a global networks business, in a transaction expected to close by mid-2026.9Warner Bros. Discovery Investor Relations. Warner Bros Discovery to Separate into Two Leading Media Companies WBD intends to structure it as a tax-free separation, which would mean another Form 8937 and another allocation.
If you still hold WBD shares that trace back to AT&T, the per-share WBD basis you calculated from the 2022 Form 8937 becomes the starting point for that next split. Save your original AT&T purchase records, the 23.48% allocation, and the resulting per-share WBD basis somewhere you can find them in a year.
Where to Get the Official Document
AT&T’s Form 8937 attachment for the WBD spin-off is available as a PDF through AT&T’s investor relations site under stockholder services.1AT&T Investor Relations. AT&T – Attachment to Form 893710Internal Revenue Service. About Form 8937 – Report of Organizational Actions Affecting Basis of Securities11Internal Revenue Service. Instructions for Form 8937 Working from the issuer document rather than your brokerage statement alone is the safest way to be sure your basis is right, especially with another corporate action on the calendar.