You may be asked by your accountant what you paid for certain shares that were deposited into a brokerage account – and if you are not sure, here are a few ways to find out:
- If you have a copy of the certificate, in the bottom right corner will be the date it was issued. This is the date the Company issued the treasury order for the certificate. Issuers keep track of all treasury orders so contact the issuer and ask them to provide you with the cost.
- Same as above, when you have the certificate, or a copy of the certificate, you can use the issue date here too. You can also use the certificate number when dealing with transfer agents. Issuers have a transfer agent that issues securities from treasury on behalf of the issuer. They MUST keep a record of shares issued etc. So, also on the bottom of your certificate will be the issuing agent. Contact the transfer agent and ask them to provide you with the price your certificate was issued at.
Now, these two options may require you to wait for someone to get back to you, but you will know what your cost on those shares are.
- This third option allows you to do a little investigative work yourself. Again, using the date your certificate was issued, you can look to see if your shares came from a private placement. That date will likely be a day or two before the issuer disseminated a closing news release. Look through the issuer’s news releases around the issue date to see if they closed a private placement. If so, you have found your cost.
Things to Remember
Having accurate costs on your securities and including these costs in a chronological manner affects your profit/loss and ultimately what you pay or can claim in capital gains/losses.
If certificate is issued as a result of options being exercised, the cost will be either exercise price or, if being T4’d, ask issuer to give you the price used for tax purposes – usually closing price on date of issue.
Also important to keep track of when providing the cost of your securities, is whether or not the securities purchased were flow-through. You receive a tax benefit from purchasing a flow-through financing that needs to be accounted for when completing your securities accounting. Flow-through shares are brought in a zero cost as they receive a tax break – however brokerage firms do not always account for this adjustment in their records.
Don’t rely on your brokerage summaries to provide your average cost, these are not always correct. See our post entitled “What Does Information Not Provided To Your Accountant Cost You?“ to read more about brokerage summaries.
Also important to keep track of when providing the cost of your securities, is to know whether or not your securities were flow-through. You receive a tax benefit from purchasing a flow-through financing that needs to be accounted for when completing your securities accounting.
This information is provided as an information service only and is not intended to substitute for competent professional advice. No action should be initiated without consulting a professional advisor.
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