Q: A tax question. Say I am up 100% on TCN at $15 if I bought 50% more and sold the lot at $15. Would that 50% lower my tax rate?
5i Research Answer:
No; assume one buys 1,000 shares at $7.50 and the stock doubles to $15.
Then, one buys 500 shares at $15, and sells all shares at $15.
The adjusted cost base is $7,500 (1,000 x $7.50) + $7,500 (500 x $15) = $15,000 for 1,500 shares, so ACB is $10 and the gain is $7,500 (1,500 x $15 minus $15,000 cost). This is the same gain as selling just the original 1,000 at $15: ($15,000 minus ACB of $7,500).