In connection with the liquidation of a U.S. corporation owned by the two Canadian corporate taxpayers, they received promissory notes owing by another U.S. corporation and cash, and elected under s. 93(1) in respect to the distribution. In finding that this election precluded the taxpayers from subsequently taking a deduction under s. 20(1)(p) when the unpaid balance of the promissory notes proved to be uncollectible, Décary J.A. stated (at p. 5362):
"Once a taxpayer has voluntarily elected, pursuant to subsection 93(1), to treat part of the proceeds of disposition comprised of some cash and of some promissory notes, as a 'deemed dividend received', the cash and parts of the promissory notes at issue lose their identity 'for the purposes of this Act'. When the deemed dividend is included in the taxpayer's income pursuant to paragraph 12(1)(k), it is included as a 'paid' dividend, not as cash and parts of promissory notes ... . The 'deemed dividend' being said by the Act to have been 'paid' and 'received', it cannot at the same time be a 'doubtful debt' or a 'bad debt'. What is deemed to have been paid cannot also be said to be due."