Mountain Lake Foods Ltd. has one class of common shares. At…
Questions
Mоuntаin Lаke Fооds Ltd. hаs one class of common shares. At the beginning of the year, 10,000 common shares are outstanding with total paid-up capital of $100,000. To finance an expansion, Mountain Lake issues 2,000 additional common shares of the same class to a new investor for $60,000 cash. Assume the full amount increases the PUC of the common-share class and that no special tax adjustments apply. Several months later, the corporation agrees to redeem 1,500 common shares owned by one of its original shareholders for $45,000. What deemed dividend arises on the redemption?