Large tax implications for long time holders!What's your ACB? This blurb doesn't take into consideration the recent BA.UN split off which complicates further.
Historical Information on Valuation Day Prices
Valuation day price – December 22, 1971
Prior to any stock split, the valuation day price for December 22, 1971 was established at $46.88. This amount was reduced to $15.63 following the 3:1 stock split of April 1979 and to $7.81 following the 2:1 stock split of May 1997. Following the May, 2000 distribution of Nortel Networks common shares, the valuation day price is no longer used in the calculation of the adjusted cost base (ACB) of BCE common shares.
If your average purchase price for all shares purchased prior to December 31, 1971 was below the valuation price of $46.88, the ACB of your BCE common shares immediately after the distribution of Nortel Networks common shares was $2.40 ($7.81 x 30.79%) while the ACB of your Nortel Networks common shares received pursuant to this distribution, and taking into account the May 5, 2000 Nortel Networks 2:1 stock split, was $2.70 ($7.81 X 69.21% / 2).
If your average purchase price, for all shares purchased prior to December 23, 1971, was above the valuation day price ($46.88), please consult your tax advisor.
Valuation day price – February 22, 1994
Shareholders who took advantage of the special tax election for BCE common shares owned on February 22, 1994, and claimed the $100,000 capital gains exemptions (before its elimination), were deemed not have held such shares prior to 1972 for purposes of calculating ACB after February 22, 1994. Thus, valuation day price ceased to be relevant after this date for shareholders who made such an election.