Where a shareholder contributes funds to the corporation which in turn are paid to satisfy the debt owing to him, s. 80 may apply. RC is prepared to rule that s. 80 is not applicable where the shareholder limits the adjustment to his ACB to the increase in the fair market value of his shares.
S.80 applies where an outstanding debt is converted under its terms into shares of the corporation which have a value lower than the principal amount of the debt.
