[Maggie-G]

Want to do homework. Can anyone refer me to a specific section(s) of the ITA, or IT(s) to help me better understand this siutation?
1. Son of indivudal controls CCPC.
2. Parent buys no-par common stock in that CCPC (approx 5% of issued)
3. Corp cannot pay a bank loan issued for operating expenses (non capital, non salary/wage)
4. Parent pays out bank loan with after tax $$; Issues a 3 year promissory note to Corp (specifying FM interest rate & monthly payments)
5. Corp cannot make principal payments (interest has been dealt with)
6. At the end of 3 years, parent forgives 100% of principal balance owing on note (no additional shares issued for forgiveness and no other benefit received by parent)

Thanks in advance to anyone who can refer me to specific/relavent reading material.

[unknown]

Question - is he (sugardaddy) trying to deduct anything?

Seems like a gift from father to son to me...

You will want to look at section 80, for starters, which has the basic rules regarding debt forgiveness

[dunner]

Section 80 would apply but maybe parents should look at forgiving the debt in their wills so S80 does not apply. Obviously, this is something to check out thoroughly from both sides.