The Adjusted Cost Basis (ACB) is the net of the principal, interest reported on tax slips less all withdrawals. Here is how the ACB is calculated:
The following increases the ACB of the policy:
- principal at issue
- if acquired by means of an absolute assignment (transfer of ownership) cash value at the time of an absolute assignment,
- money deposited by the policyholder into the annuity since issue or since one of the above, and
- taxable policy gains and accrued income previously reported to the policyholder.
The following decreases the ACB of the policy:
- proceeds received by the policyholder (i.e. partial and/or automatic withdrawals).
