Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
The determination of the adjusted cost base of shares in a situation where only part of the shares is disposed of.
Position TAKEN:
General comments provided.
Reasons FOR POSITION TAKEN:
Limited facts submitted.
XXXXXXXXXX 1999-000796
M. Azzi
January 14, 2000
Dear Sir:
Re: Adjusted Cost Base
This is in reply to your letter of November 19, 1999, wherein you requested our views on the adjusted cost base ("ACB") of shares in a situation where only part of the shares is disposed of. In the example you provide, 9000 shares of XYZ Co. have a total ACB of $10,300, and you are considering disposing a certain number of these shares.
Written confirmation of the tax implications inherent in particular transactions is given by this directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R3, dated December 30, 1996. Where the particular transactions are completed, the enquiry should be addressed to the relevant tax services office. However, we are prepared to offer the following general comments.
In the above situation, and based on the above values, if 1 share is disposed of, the ACB of that share to be used in calculating the gain from the disposition would generally be $1.14 (i.e., $10,300 X 1/9000). The ACB of the remaining shares after the disposition would therefore be $10,298.86 (i.e., $10,300-$1.14). Similarly, if 4500 shares were disposed of, the ACB of those shares to be used in calculating the gain from the disposition would generally be $5,150 (i.e., $10,300 X 4500/9000). In these circumstances, the ACB of the remaining shares after the disposition would be $5,150 (i.e., $10,300-$5,150).
We trust that these comments will be of assistance.
Yours truly,
Jim Wilson
for Director
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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