At her death on August 1 of the current year, Nancy Mori owned stocks with an adjusted cost base of $11,000 and a fair market value of $20,000, and a term deposit of $30,000. She also owned a building that had a cost of $98,750, a fair market value of $110,000, and a UCC of $70,000. She bequeaths all of her assets to her daughter, Christine, who sells the building before the end of the current year for $125,000. Christine's Taxable Income arising from the sale is $7,500.

Question

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Since Nancy bequeaths all of her assets to Christine, the building's deemed disposition is at fair market value at the time of Nancy's death, which is $110,000. Therefore, when Christine sells the building for $125,000, she realizes a capital gain of ($125,000 - $110,000) = $15,000. Since half of this amount is taxable, Christine's Taxable Income arising from the sale is $7,500.

At Her Death on August 1 of the Current Year