What is double taxation?
A)It is when two separate tax authorities tax the same corporation.
B)It is a situation that only affects sole proprietorships.
C)It occurs when the business owner pays himself or herself a salary.
D)It occurs when earnings are taxed once at the corporate level and then taxed a second time as personal income.

Question

Quizplus · Accepted Answer

Double taxation occurs when a corporation's earnings are first taxed at the corporate level and then taxed again as personal income when distributed to shareholders or owners. This does not affect sole proprietorships because they are not separate legal entities from their owners. Paying oneself a salary does not necessarily result in double taxation.

What Is Double Taxation