BUSI 4005 Chapter Notes - Chapter 15: Dividend
28 May 2018
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1. Deemed dividend
a. Increase in PUC
i. Increase PUC > increase of net asset, decrease of net
liability or decrease of other class PUC
ii. Tax
1. Deemed dividend
2. ACB
iii. Exception
1. Increase PUC from stock dividend payment
2. Decrease PUC in 1 class and increase PUC in another
class not more than decrease
3. Issue share → puc, convert contributed surplus
b. Wind up
i. Distribute fund → shareholder
ii. Wind up/ discontinue/ reorganize
iii. Tax
1. Deemed div = FMV property + fund amount – PUC
reduction
2. CG
c. Redemption
i. Stop loss rule
ii. Tax
1. Deemed dividend
2. CG
Common share ACB = PUC + capital loss of preferred
share
d. Decrease in PUC
i. Deemed dividend
ii. ACB, no if money paid included
iii. Deemed dividend on reduction of pUC
iv. Public corporation
v. No decrease in ACB
2. Wind up corporation
a. Transfer asset/ liability at FMV , no rollover
b. Dispose asset
i. Sell and pay liability and dividend to shareholder
ii. Distribute asset directly to shareholder
c. Step
i. Dispose all asset at FMV
ii. Calculate income to CDA
iii. Consider bonus to bring income lower to SBD limit
iv. Pay liability
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