Adjusted Cost Basis (ACB) - Deferred annuities

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).