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This is a pretty nitpicky tax question ... I apologize for taking someone's billable question time by asking this on a forum.

Through my employer, I have had a number of stock options translated into restricted stock awards. However, some of those restricted stock awards have been withheld to pay the potential employment income benefit (as required by the CRA). So, instead of X RSAs, I now have (X-W) RSAs.

They are not voting shares, so there should be no discount on them due to the inability to receive dividends or being able to vote during shareholder meetings on them.

(1) At the time at which I get the RSAs to vest, is the ACB for each RSA equal to:

$value * x / (x-w)? (i.e. if I had 300, and 200 were withheld for taxes, the ACB should be triple the value of the shares on the day of transaction).

(2) If they were granted in two tranches, both of which vest on the same day at different withholding rates (some of the options are favourable from a taxation viewpoint, others have not been held long enough to be favourable), should I simply be combining both tranches for the purposes of the ACB?

Thanks, in advance.

SlightlyMad
 

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This is a pretty nitpicky tax question ... I apologize for taking someone's billable question time by asking this on a forum.

Through my employer, I have had a number of stock options translated into restricted stock awards. However, some of those restricted stock awards have been withheld to pay the potential employment income benefit (as required by the CRA). So, instead of X RSAs, I now have (X-W) RSAs.

They are not voting shares, so there should be no discount on them due to the inability to receive dividends or being able to vote during shareholder meetings on them.

(1) At the time at which I get the RSAs to vest, is the ACB for each RSA equal to:

$value * x / (x-w)? (i.e. if I had 300, and 200 were withheld for taxes, the ACB should be triple the value of the shares on the day of transaction).

(2) If they were granted in two tranches, both of which vest on the same day at different withholding rates (some of the options are favourable from a taxation viewpoint, others have not been held long enough to be favourable), should I simply be combining both tranches for the purposes of the ACB?

Thanks, in advance.

SlightlyMad
Now, I'm not a tax expert by any means, so be sure to get professional opinion but FWIW, here it is:

Assume you received, n shares worth x. Your ACB per share is x/n. It doesn't matter that w shares were sold to pay taxes. It also doesn't matter that w1 shares were sold to pay taxes for one tranche and w2 for the other.
 
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