Alaris Royalty Corp ALARF

Getting pretty intriguing...

[constructionsite]

now that it is yielding around 10%, based on proposed new dividend of 0.31 quarterly. 

Given the expected loss of divi tax credit assuming the conversion goes through, however, this one might be better in registered accounts.

[Rakaposhi]

My RBC account already shows the new distribution per unit. So I guess it's a done deal. Unfortunately, those of us who've held this for years are now screwed because we either pay the tax on the dividend or cut our losses which can be substantial.

[mickeymouse]

If you are in Canada and hold this in a TFSA or RRSP the increase in distribution will be a benefit as you can't claim a dividend tax credit in registered accounts anyways.  In a non - registered account there will be a return of capital component to the distribution - this will reduce your adjusted cost base on your equity - when you sell your units this will increase your capital gain

[CanSiamCyp]

Also - there is nothing to prevent Alaris from passing some dividend through to unitholders as part of the total distribution. I previously used the BEP.UN (not an income trust) distribution as an example only: the 2019 distribution was roughly 50% Dividend (for which the DTC was applicable), 25% Return of Capital (resulting in an ACB adjustment as per Mickey Mouse's post), and 25% Foreign

[Rakaposhi]

Thanks Can and Mouse for that. Indeed, I can deal with the tax issues later. At the moment, I am sitting at a 40.91% capital loss on AD. I'll have RBC adjust the book value when the deal is through on Sep 4th so as to maintain the tax loss on the T5008 when I sell them. Cheers

[CanSiamCyp]

As I understand it, Alaris will establish a Fair Market Value (FMV) for the newly exchanged AD.UN units - which will be their initial ACB. The aggregate FMV (ACB) for your units of AD.UN will be subtracted from the ACB of your previous AD shares to determine the Capital Loss to be reported in 2020. At least that is my understanding. I do not know if the FMV will be communicated to the brokers so

[Rakaposhi]

Ok, let's hope for the best. I sure don't want to lose the capital loss on this one.