Mr. and Mrs. Chen own a non-registered investment account with a current fair market value of $750,000, which they hold as joint tenants with right of survivorship. The adjusted cost base (ACB) of these investments is $400,000. If Mr. Chen passes away, what are the immediate capital gains implications for his estate?

Question: Mr. and Mrs. Chen own a non-registered investment account with a current fair market value of $750,000, which they hold as joint tenants with right of survivorship. The adjusted cost base (ACB) of these investments is $400,000. If Mr. Chen passes away, what are the immediate capital gains implications for his estate?

Answer options: ✅ No capital gains are triggered at the time of Mr. Chen's death due to the spousal rollover provisions.

• A taxable capital gain of $175,000 is triggered, representing half of the accrued gain.
• The entire accrued capital gain of $350,000 is triggered, split between the estate and Mrs. Chen.
• A capital gain of $350,000 is triggered, but it is fully deferred until Mrs. Chen disposes of the assets.

Correct answer: No capital gains are triggered at the time of Mr. Chen's death due to the spousal rollover provisions.

Explanation: When property held in joint tenancy with a spouse passes upon death, the deceased's half interest is deemed to be transferred to the surviving spouse at the adjusted cost base, resulting in a spousal rollover. This defers any capital gain until the surviving spouse disposes of the asset or dies.