Guide to Tracking Shares and Transaction Detail for Shares Acquired Prior to Jan. 1, 2011

Updated Dec. 17, 2010
The following information is intended to assist you in maintaining the details of your Computershare common stock account as an SAIC stockholder and in gathering information to help you to determine the cost basis of your shares acquired prior to Jan. 1, 2011 for tax purposes.


Overview

This discussion and sample form should not be considered as a source document or as proof of your tax liability. Specific questions about your cost basis and your particular tax situation should be referred to your tax advisor.

During November 2009, you should have received a final Computershare Class A Preferred Stock Investor Activity Report (IAR) which you should maintain in your permanent records. This final IAR details your vested SAIC class A preferred stock account holdings and transaction history prior to the stock reclassification that occurred on Nov. 16, 2009. This final IAR provides information regarding the acquisition dates and the "adjusted acquisition cost per share" for the shares of class A preferred stock that you had acquired. In most, but not all cases, the adjusted acquisition cost per share may be used to help you determine the cost basis of your shares.

Common Stock Statements

SAIC, Inc. common stock statements you receive will display the total number of shares of common stock held as of the statement date and any transfers in and out of your Computershare common stock account. Future acquisitions and dispositions of common stock will be displayed as separate transactions in the year that they occur.

For shares deposited into your common stock account as a result of an option exercise, the amount displayed on your statement as the "price per share" will be the market value on the date you submit your option exercise. For shares deposited into your common stock account as a result of a restricted stock vesting event, the amount displayed as the "price per share" will be the market value on the vesting date. For purposes of our stock plans, market value is the closing sales price of SAIC common stock as quoted on the New York Stock Exchange for the trading day before the date the value is to be determined. Stock price information will not be displayed for other transactions (i.e., stock transfers).

SAIC, Inc. Employee Stock Purchase Plan (ESPP) statements you receive will display the ESPP shares that are held in your Computershare ESPP account. The amount displayed as the "price per share" on these statements will be the discounted purchase price for shares held in the ESPP account.

Maintaining Your Cost Basis Information and Transactional Detail

Beginning on Jan. 1, 2011, all brokers, transfer agents and employee plan administration agents will be required to track cost basis for certain new shares acquired after this date. However, stockholders are responsible for maintaining their own cost basis records for any shares acquired prior to calendar year 2011. You will need to have the cost basis for the shares you have acquired for tax purposes. Whether you track this information using a paper or electronic file, you will need this information when you sell, transfer or otherwise dispose of your shares.

Your annual SAIC, Inc. common stock statements will include activity from the current year only; therefore, you should consider accumulating the transaction information annually or as the transactions occur. This guide has been developed as an example of one method of tracking shares you acquire after the reclassification and information that may be helpful to you and your tax advisor in determining the cost basis of your shares prior to calendar year 2011.

The Excel spreadsheet set forth below is an example of a form that can be used to track the type of information you will need in order to determine the cost basis of your shares acquired prior to calendar year 2011. Each person's situation is unique and this form may not contain all the information that you need to determine your cost basis. Specific questions about your cost basis and your particular tax situation should be referred to your tax advisor.

SAIC, Inc. Common Stock Statement —Tracking Shares and Transaction Detail

SAIC, Inc. Common Stock Statement

Your SAIC, Inc. common stock statement will display shares deposited into your common stock account as being "acquired" and shares disposed as being "withdrawn." A statement will be generated by Computershare after each acquisition or disposition of common stock. You will receive an annual SAIC, Inc. common stock statement at the beginning of each calendar year that summarizes your account activity from the previous calendar year. A "balance forward" will be shown from year to year on the "year-to-date transaction detail" section of your statement. You may find it easier to maintain all of your account detail in one form for tax purposes.

Under the year-to-date transaction detail section of your statement, you will find information such as "date," "transaction description," "shares acquired or withdrawn" and "price per share," which may be used to help you determine the cost basis of your shares.

The transaction description on your statement will generally categorize stock transactions as either a "book to book" transaction, a "deposit" or a "shares sold" transaction. These terms encompass various types of transactions that will be important to identify when preparing your tax returns. The table below will assist you in understanding the type of stock transactions that might appear on your SAIC, Inc. common stock statement:

Transaction Description Examples of Transaction Types
Book to Book
  • Acquisition of shares through a transfer from class A preferred account to common stock account (November 2009 reclassification)
  • Disposition of shares through a transfer from common stock account to a broker or to another common stock account at Computershare
  • Acquisition of shares through a transfer of shares into your common account (such as from your ESPP account or another Computershare account)
  • Shares deposited in your common stock account as a result of a restricted stock award vesting event
Deposit Issuance of shares acquired through an option exercise
Shares Sold Shares sold through the Computershare share selling program

A sample form is provided as an example of the type of information you will need to track in order to determine the cost basis of your shares.

This sample form should not be considered as a source document or as proof of your tax liability. Each person's situation is unique and this form may not contain all the information that you need to determine your cost basis. Specific questions about your cost basis and your particular tax situation should be referred to your tax advisor. Your tax advisor may suggest you modify or add additional information to this form or provide additional supporting documents to cost basis based upon your personal tax situation.



To use the form, you will first need to obtain your SAIC, Inc. Common Stock Statement and the ESPP Statement if you transferred shares from your ESPP account into your Computershare common stock account. You should begin by entering transaction detail related to your acquisitions and your dispositions for new transactions after the reclassification. Some of this information such as date, transaction description, number of shares and the price per share may be available on your SAIC, Inc. Common Stock Statement. As noted above, these transactions will only be listed on your SAIC, Inc. Common Stock Statement as "Deposit," "Book to Book" or "Shares Sold." Therefore, any additional information you can add to your form for each transaction type (such as option exercise, restricted stock vesting, etc.) will be useful to help you and your tax advisor determine your cost basis.

  • For deposits resulting from an option exercise or a restricted stock vesting event, the Price Per Share, Shares Acquired and the Transaction Date will be displayed on the SAIC, Inc. Common Stock Statement in the "Year-To-Date Transaction Detail" section.
  • For transfers from your ESPP account into your Computershare common stock account or for a sale through your ESPP account, you will need to refer to your ESPP statement for information. The amount displayed as the "Price Per Share" on your ESPP statement will be the discounted purchase price for all shares held in the ESPP account. See U.S. Federal Income Tax Information for ESPP for an overview of the tax considerations for ESPP shares.
  • The shares transferred as part of the reclassification from your Computershare class A preferred stock account to your common stock account are displayed on your final Computershare Investor Activity Report and also appear on your SAIC, Inc. Common Stock Statement as one lump sum amount with Transaction Description of "Book to Book," a zero Price Per Share and a Transaction Date of Nov. 16, 2009.

Form 1099-B

Information regarding any stock sold is reported on a Form 1099-B. Generally, the information on the Form 1099-B should be reported on IRS Form 1040, Schedule D - Capital Gains and Losses. If you sell shares acquired prior to 2011, and certain noncovered shares acquired after Jan. 1, 2011, you will receive a Form 1099-B which will report the gross proceeds or the gross proceeds less commissions. This Form 1099-B will not provide any short or long term gain or loss information. For these non- covered security sales, stockholders would continue to be responsible for calculating the short or long-term gain or loss on the transaction based on their own cost basis records.

If you also sell shares acquired after 2011 during the same year you sell shares acquired prior to 2011, you will receive a separate Form 1099-B for this transaction. This Form 1099-B will report the sale price or the sales prices less commissions as well as the cost basis and the reported gain or loss. Further, a Form 1099-B will be issued if the transaction results in a short-term gain or loss and a separate Form 1099-B will be issued if the transaction results in a long-term gain or loss. If a transaction results in both a long-term and a short-term gain or loss, two separate Form 1099-Bs would be issued. If you sell both covered and noncovered securities and/or have both short and long-term gain or loss on your sale, you would receive multiple Form 1099-Bs.


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