mikewu69

My problem is that:

In 2004, I was give a large number of a company shares (not yet listed in a stock market then). I was not a company employee but one of founders at that time. The share certificates were dated June 1, 2004 with my name on them. I did not pay any money. The share was worth $0.1 each.

Due to some problems, I signed and accepted these shares on July 1, 2005. The shares were listed on a major stock exchange then. Each share was worth of $0.7.

During last a few weeks, I sold some of the shares and received a large sum of money, at price of about $0.9 each share.

I also have a good income job. So in 2006 taxation year, I estimate that I will pay about $80,000 in both federal and provinal taxes.

My financial advisor told me that I could reach agreement with the company that I paid the amount to acquire the shares (e.g. $0.4 each share), so that the capital gain would be $0.9-$0.4 each share. I know there is a risk with it (cheating).

How can I reduce the capital gain? Can I say that I acquire the shares at $0.7 each as my base cost, so that the capital gain would be $0.9-$0.7 = $0.2 each share? because I signed the certificates at the time when the price was about $0.7. If the governments find out, do they treat $0.7 each as my income in 2004. Because income tax rate is double that of the capital gain, of course, I do not want to do that.

Is there a better way?

DNA

At least there are two legal ways to solve this problem, if your financial advisor is knowledgeable enough, he/she should know the solution. Otherwise, you better to consider to find another one as your financial advisor.<O:p</O:p