Double taxation means
A) if stockholders decide to sell their shares, they are subject to paying twice the amount of taxes on any capital gains.
B) as the owner of the company, you pay twice the amount in employment taxes on yourself, as you do on your employees.
C) corporations pay taxes on their profits. If they distribute after-tax profits to the stockholders, the stockholders also pay taxes on the distribution.
D) if the corporation doubles its profits from the previous year, the firm's tax rate (the percentage it pays in taxes) will also double.

Question

Quizplus · Accepted Answer

A corporation files a separate tax return from its owners. It pays taxes on all profits earned after legitimate expenses are deducted. If any profits remain after taxes are paid, these are considered after-tax profits and they can be distributed to owners in the form of dividends. These earnings are subject to double taxation because the government requires the recipient (the owner/stockholder) to pay taxes on the dividends, even though they were already taxed when they were part of the corporation's earnings.

Double Taxation Means