Mrs. Lee passes away, leaving a portfolio of publicly traded shares with an accrued capital gain of $200,000 to her husband, Mr. Lee. She acquired these shares at an ACB of $100,000, and their fair market value at her death is $300,000. If Mr. Lee opts for a full spousal rollover, what will be the ACB of these shares in Mr. Lee's hands?

Question: Mrs. Lee passes away, leaving a portfolio of publicly traded shares with an accrued capital gain of $200,000 to her husband, Mr. Lee. She acquired these shares at an ACB of $100,000, and their fair market value at her death is $300,000. If Mr. Lee opts for a full spousal rollover, what will be the ACB of these shares in Mr. Lee's hands?

Answer options: ✅ The ACB will remain $100,000, effectively deferring the capital gain until Mr. Lee disposes of them.

• The ACB will be set to $300,000, reflecting the fair market value at the time of Mrs. Lee's death.
• The ACB will be adjusted to $200,000, representing half of the fair market value.
• The ACB is not relevant for spousal rollovers; only the fair market value is considered for future taxes.

Correct answer: The ACB will remain $100,000, effectively deferring the capital gain until Mr. Lee disposes of them.

Explanation: With a full spousal rollover, the deceased spouse is deemed to have disposed of the property for proceeds equal to its adjusted cost base (ACB), and the surviving spouse is deemed to have acquired the property at that same ACB. This defers the capital gain entirely, with the original ACB carrying over to the surviving spouse.