Double Taxation means:
A)A corporation must pay double the amount of tax that an unincorporated business pays.
B)A corporation pays taxes to the federal government and to the state government.
C)The corporation pays tax on its income and the stockholders pay tax on their dividends.
D)The corporation pays tax on its income and the officers of the corporation pay tax on their salaries.

Question

Quizplus · Accepted Answer

Double taxation refers to a situation where a corporation and its shareholders are both taxed on the same income. In this case, the corporation pays tax on its income, and the stockholders pay tax on the dividends they receive from the corporation. This results in the income being taxed twice, hence the term double taxation.

Double Taxation Means