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Brokerages internally seem to keep track of the cost of each share in a portfolio (one example is fidelity). When selling, other platforms, like QTrade, seem to only let you pick a number of shares to sell, and not which particular ones. So it doesn't give fine control over the amount of gain (or loss) generated by a trade.

Some spreadsheets I saw, to help keep track of capital gains and losses, will keep track of ACB for the stock as a single property-asset that grows or shrinks, rather than a series of unique assets each with their own cost tag.

Are the following two approaches (I don't know their technical name) both valid ways of keeping tabs on gains and losses, come tax season:

  1. treat all units of the same stock symbol as a single "propery asset" and update the average cost of the whole thing before you sell. the average cost of the part you sell or dispose of is proportional to the fraction of the property you sell.

  2. treat each unit as a distinct thing to sell. when you sell, choose which units you sell (in your books), and those that you keep. The ACB of the two parts evolve independently from there on.

See:

(I'm in Canada)

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In Canada, shares are considered 'identical properties', and sales of identical properties require that the adjusted cost basis is averaged over all purchase prices up until each point of sale on the date it occurs.

See here from CRA: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/shares-funds-other-units/identical-properties.html

Mathematically, you continue 'rolling forward' your combined ACB for all existing shares, adding in new share costs when purchases occur, creating a new combined ACB that becomes a new average ACB per share. When you sell shares, your gain is based on the sale price less the average ACB at the point of sale.

Example: assume you buy 50 shares at $7 each, then sell 10 shares at $8 each [which has a gain of $1 per share, or $10 total], then buy 30 more shares at $6 each. After these actions, your combined ACB would be [40 remaining shares at $7 each + 30 shares at $6 each = $460 total ACB, which is $6.57 ACB per share. If you then bought another 5 shares at $10 each, your combined ACB would be $510, which is $6.38 per share. If you then sold 30 of those shares for $9 each, it would be a gain of $2.62 per share. If you then bough another 40 shares at $10 each, your combined ACB would be 50 shares at $6.38 ACB + 40 shares at $10 each = $718.75 total ACB, or $7.99 ACB per share.

In the US, you can elect to use the 'First In First Out' method instead, which basically assumes that the first share you bought becomes the first share you sell, and thus requires/allows you to individually track the ACB of shares as you purchased/sold them. This method is not available in Canada.

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  • I asked originally in part because I wanted to transfer a portion of my shares from a non-registered account into a TFSA (in kind). one thing that wasn't clear to me was whether the part that moves to the TFSA is still part of the same property or not. -- and what I've read seems to indicate that what happens in that case is that the transfer of shares to the TFSA is a "deemed disposition", and you ignore those shares in the calculation of the ACB in the non-reg acct, going forward. Doing it one way I could generate a loss, and the other, a gain -- but it doesn't matter if we can't choose.
    – pf_init_js
    Commented Aug 13, 2022 at 0:44
  • "Properties of a group are considered to be identical if each property in the group is the same as all the others. The most common examples of identical properties are shares of the same class of the capital stock of a corporation or units of a mutual fund trust." What's interesting here, is that if we consider that I could hold a unit of the same symbol in a non-registered account, one unit in a TFSA, and one unit in an RRSP, and I was to buy an additional share in the non-registered account, I'd have to calculate the new ACB as if I had 2 shares, not 4.
    – pf_init_js
    Commented Aug 13, 2022 at 0:58
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    @pf_init_js Yes averaging is done within the group of shares held in the same tax status - ie don't average cost of TFSA-held shares with those held in a regularly taxable brokerage account. Commented Aug 15, 2022 at 12:30

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