Unitholders are required to reduce the adjusted cost base
("ACB") of their fund units by the amount reported in Box 42 "Amount Resulting in Cost Base Adjustment" of the T3, which is equal to the cumulative distribution declared during calendar 2007 less the amount reported as "Other Income" in Box 26 of the T3.
Holders of PET Units are required to reduce the Adjusted Cost Base
of their Units by the Return of Capital (i.
Former holders of Ketch Trust Units are required to reduce the Adjusted Cost Base
of their Trust Units by an amount equal to the cumulative cash received and receivable from cash distributions minus cumulative taxable amounts reported as "Other Income" on their slips (if any).
Such distribution will not be paid in cash but will be paid in units which will then be automatically consolidated, resulting in unitholders of record on December 30, 2005 incurring a non-cash capital gain equal to the Additional Distribution per unit with a matching increase in their adjusted cost base
If the initial distribution of Aeroplan units is treated as a return of capital, the distribution will not give rise to immediate taxation but the adjusted cost base
to ACE shareholders of their ACE shares for Canadian tax purposes will be reduced by an amount equal to the fair market value, as of the record date for the distribution, of the Aeroplan units distributed to ACE shareholders or sold on their behalf.
The value at the time of distribution of the Units received by, or sold on behalf of, a shareholder represents the shareholder's adjusted cost base
Such amount reduces the adjusted cost base
("ACB") of a holder's Units.
This review is expected to be completed by March 7, 2006, at which time a news release will be issued providing details of any distribution of trust units which may be deemed to have occurred and of the tax impact on the adjusted cost base
of Fund units.
Algoma will make an application for a tax ruling respecting a corporate reorganization involving a return of paid-up capital to shareholders, which, if successful, would result in a reduction in adjusted cost base
for shareholders and not dividend tax treatment.
This allocation of income will increase unitholders' adjusted cost base
("ACB") in their units by the amount of the additional payment.
Congress defined net unrealized built-in gain for purposes of the limitation on the built-in gain tax as the fair market value of S corporations' assets at the time of conversion to S status minus their aggregate adjusted cost bases