1. What Is Adjusted Cost Basis?

Adjusted Cost Basis (ACB) represents the average cost per share of an investment, accounting for all purchases, sales, and adjustments over time. It is used to determine capital gains or losses for tax purposes when selling investments.

2. How Does the Calculator Work?

The calculator uses the ACB formula:

Where:

• \( \text{Total Cost} \) — Sum of all purchase costs including commissions and fees ($)
• \( \text{Total Shares} \) — Current number of shares held (count)

Explanation: The formula calculates the average cost per share by dividing the total investment cost by the total number of shares owned.

3. Importance of ACB Calculation

Details: Accurate ACB calculation is essential for determining capital gains tax liability, making informed investment decisions, and maintaining proper tax records for securities transactions.

4. Using the Calculator

Tips: Enter total cost in dollars (including all fees and commissions) and total shares as a whole number. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is included in total cost?
A: Total cost includes all purchase prices, brokerage commissions, transaction fees, and any other costs directly related to acquiring the shares.

Q2: How does ACB differ from purchase price?
A: ACB represents the average cost across all shares owned, while purchase price refers to the cost of individual transactions. ACB adjusts with each new purchase or sale.

Q3: When does ACB need to be adjusted?
A: ACB should be recalculated after every purchase or sale of shares to maintain accurate cost basis for tax reporting.

Q4: Are dividends included in ACB?
A: Reinvested dividends increase both total cost and total shares, so they are included in ACB calculation. Cash dividends do not affect ACB.

Q5: How is ACB used for tax purposes?
A: When selling shares, ACB is subtracted from the sale proceeds to determine capital gains or losses for tax reporting.