The ACB of Nortel & BCE Split

by Tax Guy - Burlington Accountant on December 28, 2009 Print This Post Print This Post

Reader QuestionI acquired stocks of Nortel from the spin-off of Nortel from BCE and still hold them. Do the Nortel stocks have to be held until BCE shares are sold or can they be offset against other capital losses using the value at the time of the split?

The ACB was split when the spin-off occurred. You can sell either shares and their gains and losses are independent. At the end of the year, your cumulative losses are netted against cumulative gains.

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Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

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William MacDonald December 28, 2009 at 1:09 pm

When is the last day of trading for capital gains or losses on US stocks for Candian residents and taxpayers.

Tax Guy December 28, 2009 at 2:31 pm

@ William – All trades must settle in your account by December 31. Stocks trade T+2 which means tomorrow would be the last day for stocks (MF are T+3 so the deadline is past).

But check with your broker to make sure.

Shirley - Canada April 19, 2010 at 7:16 pm

April 19/10
I’m totally confused trying to figure out the Nortel ACB for my 2009 tax return. I did ok figuring out the BCE/Nortel percentage from the 2000 spin off; I did ok figuring in the miniscule dividends into 2001 (arriving at average cost per share of $17.97). Fast forward to December 2006 when my pre-consolidate 169.4022 shares of Nortel became 16.94022 consolidated shares which I finally relinquished in December 2009 for 0.031 per share. However, I can’t wrap my head around what to do next. Please, an anyone give me some clear direction as to what I do next to finish this off. Please

Tax Guy April 20, 2010 at 1:57 pm

Hello Shirley,

Nortel has an ACB calculator to help determine how much your shares are worth. The plan allowed for a distribution of 1.570386 Nortel shares for each BCE held. If you owned 100 BCE you would have received 157 Nortel and a cheque for $3.86. The $3.86 would have been taxable in the year of the split.

The ACB of the Nortel shares would be 0.6921 of the cost of the BCE shares.

Dividends received since have no bearing on the ACB unless they were enrolled in a DRIP program or were used to buy more shares. If they were not used to buy more shares, they are not relevant.

Try the calculator and then if you have more questions, please feel free to ask.

Shirley - Canada April 20, 2010 at 7:49 pm

April 20/10
Thanks for the response but it does not go far enough to answer my specific question(s). I used the above BCE/Nortel percentages to get an ACB for the acquisition of 169.4022 Nortel shares(including DRIP) but…..there must be a next step to get the ACB of selling these Nortel shares in Dec 2009 that were now reduced in number to 16.94022 because of the 1 for 10 consolidation in December 2006. So, how do I reconcile the Dec 2006 pre-consolidated 169.4022 shares with the 16.94022 shares that I disposed of in December 2009 for 0.031 per share.
Am I complicating things by thinking there is more to it than just subtracting the proceeds of disposition (51 cents) from the actual acquisition cost ($3,044.68)? Thanks for any help with this.

Tax Guy April 20, 2010 at 7:56 pm

Hi Shirley,
The answer is actually pretty simple. What did you pay, in total, plus commissions for your shares? This is your ACB!

The ACB “per share” is the above divided by the number of shares you owned at the time of sale.

You see, the number of shares is only relevant for determining the ACB per share at the time of sale…If you sold all of your shares, then the actual count of shares is totally irrelevant.

The gain or loss is: What did you pay less what you paid!

Lily April 23, 2010 at 10:49 pm

Hi, can the Nortel stocks be considered an ‘Allowable business investment loss (ABIL)’?

Tax Guy April 24, 2010 at 6:58 am

Hello Lily,
No they cannot. Only shares of a small business corporation may be.

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