Personal Finance

Capital gains - ACB and merger...

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  • Mar 5th, 2017 7:48 pm
Deal Addict
User avatar
Dec 19, 2007
1711 posts
334 upvotes
Toronto

Capital gains - ACB and merger...

Sorry, first time doing this and I want to make sure I'm doing this right.

Image

I bought a total of 1200 shares of Company A for a calculated ACB of $0.60.
I bought a total of 1300 shares of Company B for a calculated ACB of $2.21
Company A then merged with B and the 1200 shares of A turned into 558 of B.
I then sold 1858 shares of B @ $3.90 per share for an account credit of $7238.75

Is the ACB of Company A irrelevant for taxes now? How do I factor in the 558 merger shares into Company B? Do I have to find out the share price of B at the time of merger to calculate the ACB? This is effectively all the info I was given by my broker.

Any tips would be appreciated.

EDIT - Maybe I'm over thinking this? As I sold everything at once, is it just the total credit to the account minus the total share cost = capital gain? It just means that post-merger the cost of those 558 shares (instead of the original 1200) remains at $719.06? Hence the capital gains are $7238.95 minus $3594.76 equals $3644.99, and I'm taxed on the latter?
2 replies
Deal Guru
Jan 19, 2017
10048 posts
6145 upvotes
spintheblackcircle wrote: Sorry, first time doing this and I want to make sure I'm doing this right.

Image

I bought a total of 1200 shares of Company A for a calculated ACB of $0.60.
I bought a total of 1300 shares of Company B for a calculated ACB of $2.21
Company A then merged with B and the 1200 shares of A turned into 558 of B.
I then sold 1858 shares of B @ $3.90 per share for an account credit of $7238.75

Is the ACB of Company A irrelevant for taxes now? How do I factor in the 558 merger shares into Company B? Do I have to find out the share price of B at the time of merger to calculate the ACB? This is effectively all the info I was given by my broker.

Any tips would be appreciated.

EDIT - Maybe I'm over thinking this? As I sold everything at once, is it just the total credit to the account minus the total share cost = capital gain? It just means that post-merger the cost of those 558 shares (instead of the original 1200) remains at $719.06? Hence the capital gains are $7238.95 minus $3594.76 equals $3644.99, and I'm taxed on the latter?
I would think it is the same as share split that you are given more shares or different company shares. If there is tax slip such as T5 or T3 issued for the merger, then just use the simple way, I.e. Total proceed minus total costs of both original company shares. Actually the end result is the same no matter which way you use.
Deal Addict
User avatar
Dec 19, 2007
1711 posts
334 upvotes
Toronto
ml88888888 wrote: I would think it is the same as share split that you are given more shares or different company shares. If there is tax slip such as T5 or T3 issued for the merger, then just use the simple way, I.e. Total proceed minus total costs of both original company shares. Actually the end result is the same no matter which way you use.
Yup, I read up a little more and that seemed to be correct.

Thanks.

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