Upon browsing the ARX website, I found the following (but I'm still confused...) para within the document titled
ARC Energy Trust Corporate Conversion Tax Implications to Unitholders:
A Unitholder, other than a Unitholder that holds Trust Units in a Deferred Plan, should report the disposition of its trust units pursuant to the Arrangement on their 2010 Income Tax Return with proceeds of disposition equal to the cost amount to the Unitholder of the Trust Units so exchanged for Common Shares of ARC Resources. As a result, such holder will not realize a capital gain or a capital loss on the exchange of their trust units for Common Shares of ARC Resources.
http://www.arcresources.com/assets/pdfs/documents/tax/ARC_TaxInfo_CorpConversion_Feb9_2011.pdf
I'm inclined to understand that the proceeds of disposition should be equal to the (adjusted) ACB.
[ ... ]
I'm confused as well.
Where I've had the option of new shares without a CG or CL, the first requirement was that if the broker sent a notice asking for instructions to choose a deemed disposition (i.e. as if the stock was sold with a CG or CL) or the tax free rollover (i.e. old share ACB = new share ACB), a choice had to be made within the time limit. If no choice was recorded, the broker would register the default action with CRA.
The second requirement was to keep records showing the per-conversion ACB of the old shares and a matching start of the new shares using that ACB. So if the per-conversion ACB was $100, the starting ACB for the new shares is $100.
The trust adds the complication that a negative ACB may require some of the distribution money to be reported as a CG.
As long as the final trust ACB calculation shows the trust ACB as positive, I am at a loss as to why anything would be reported on the 2010 tax return.
I wonder if they did something weird. I'll have to check this out when I get more time.
Cheers
