Sarah inherited 2,000 mutual fund units from her grandmother. The grandmother's Adjusted Cost Base (ACB) for these units was $12.00 per unit. At the time of transfer due to death, the market value of each unit was $15.00. What is Sarah's ACB for these inherited units?

Question: Sarah inherited 2,000 mutual fund units from her grandmother. The grandmother's Adjusted Cost Base (ACB) for these units was $12.00 per unit. At the time of transfer due to death, the market value of each unit was $15.00. What is Sarah's ACB for these inherited units?

Answer options: ✅ $15.00 per unit

• $12.00 per unit
• $13.50 per unit
• The ACB is a blended rate derived from both values

Correct answer: $15.00 per unit

Explanation: Upon the death of an investor, Canadian tax rules generally deem a disposition at fair market value (FMV). Therefore, the new owner's ACB is reset to this FMV, which was $15.00 per unit at the time of death.