1. What is Adjusted Cost Basis?

Adjusted Cost Basis (ACB) represents the average cost per share of a stock investment after accounting for various adjustments. It is used to determine capital gains or losses for tax purposes when selling shares.

2. How Does the Calculator Work?

The calculator uses the Adjusted Cost Basis formula:

Where:

• \( Total\ Cost \) — Total amount paid for all shares ($)
• \( Adjustments \) — Additional costs or adjustments ($)
• \( Shares \) — Total number of shares owned

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

3. Importance of ACB Calculation

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

4. Using the Calculator

Tips: Enter the total cost in dollars, number of shares, and any adjustments (commissions, fees, or other costs). All values must be valid (total cost ≥ 0, shares > 0).

5. Frequently Asked Questions (FAQ)

Q1: What are common adjustments to cost basis?
A: Common adjustments include brokerage commissions, transaction fees, reinvested dividends, stock splits, and return of capital distributions.

Q2: Why is ACB important for tax purposes?
A: ACB determines your capital gain or loss when selling shares, which directly affects your tax liability. Lower ACB means higher capital gains and potentially higher taxes.

Q3: How does ACB differ from purchase price?
A: Purchase price is what you initially paid per share, while ACB includes all adjustments and represents the true cost per share for tax calculations.

Q4: When should I update my ACB?
A: Update ACB after every transaction that affects your position, including purchases, sales, dividends reinvested, stock splits, or corporate actions.

Q5: Can ACB be negative?
A: No, ACB cannot be negative. It represents the cost per share and should always be a positive value or zero.