Which of the following transactions that involve an increase in PUC will result in an ITA 84(1)deemed dividend?

Question

Quizplus · Accepted Answer

According to ITA 84(1), a deemed dividend arises when a corporation issues shares to a shareholder for consideration less than the PUC of the shares. In option A, the increase in PUC is due to a stock dividend, not a share issuance, and there is no mention of consideration. Option B involves an equal decrease in PUC, and option D involves consideration in excess of the amount added to PUC. Therefore, the only option that meets the criterion of ITA 84(1) is C, where shares are issued for an amount less than their PUC to settle a debt.

Which of the Following Transactions That Involve an Increase in PUC