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Jean recently retired at age 60.

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Jean recently retired at age 60. A passionate art collector for some 30 years, Jean now has an impressive collection of Canadian paintings. His collection, which he acquired at a cost of $150,000, is currently valued at $600,000.

Jean has over $450,000 in his RRSP. He has been living alone in a rental condo since his divorce five years ago.

When he dies, Jean will leave his property to his only child, Claudia, who is 33, married and has two children.

If he does not make any provisions to cover the tax liability, how will Jean's tax return be affected for the year of his death?

A.

A taxable capital gain of $225,000 will be declared for his art collection and the RRSP will be transferred directly to Claudia.

B.

A taxable capital gain of $450,000 will be declared for his art collection and the RRSP will be transferred directly to Claudia.

C.

A taxable capital gain of $225,000 will be declared for his art collection and the entire RRSP will be considered income earned by Jean.

D.

A taxable capital gain of $450,000 will be declared for his art collection and for the cashing in of his RRSP.

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