"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 the situation where a corporation pays tax on its income and the stockholders pay tax on their dividends received from the same income. This can be seen as "double" taxation because the same income is being taxed twice, once at the corporate level and once at the individual level. This is different from unincorporated businesses where the business income is only taxed at the individual level of the owner.

"Double Taxation" Means