Adjusted Cost Base

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Adjusted Cost Base

In Canadian taxes, a calculation of the cost of an asset that includes expenditures indirectly related to the purchase price of the asset. For example, the adjusted cost base may include improvements made to real estate or commissions paid for a security. It is important to note that these expenses may be required expenses (one must pay commissions to brokers if one wishes to trade on the stock market), but they are not included in the purchase price, per se. The ACB may also include dividends that are reinvested. In Canada, one is liable for capital gains taxes on an asset sold for a price greater than the adjusted cost base.
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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.
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