Adjusted Cost Base (ACB)
What is Adjusted Cost Base (ACB)?
How Does Adjusted Cost Base (ACB) Work?
Let's assume Company XYZ buys a factory building for $1,000,000. If Company XYZ spends $500,000 to enlarge the building and bring older parts of the building up to code, then the adjusted cost base (ACB) on the building would equal $1,000,000 + $500,000 = $1,500,000.
ACB per unit = (initial investment + additional contributions + reinvested distributions - previous redemptions) / units owned
Why Does Adjusted Cost Base (ACB) Matter?
In our example, if Company XYZ sells the factory for $2,000,000, the taxable gain is $2,000,000 - $1,500,000 = $500,000 rather than $2,000,000 - $1,000,000 = $1,000,000.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.