What is double taxation? A. The employees of the corporation are subject to doub

Question

What is double taxation? A. The employees of the corporation are subject to double taxation--first when they get their paychecks and the. When they pay state and federal income tax. B. The owners of the corporation are subject to double taxation--first at the corporation level and then again at a personal level when they are give dividends. C. The supplies of the corporation are subject to double taxation--first when the corporation pays their invoices and then again when they have to pay federal taxes. D. None of he above. What is double taxation? A. The employees of the corporation are subject to double taxation--first when they get their paychecks and the. When they pay state and federal income tax. B. The owners of the corporation are subject to double taxation--first at the corporation level and then again at a personal level when they are give dividends. C. The supplies of the corporation are subject to double taxation--first when the corporation pays their invoices and then again when they have to pay federal taxes. D. None of he above. A. The employees of the corporation are subject to double taxation--first when they get their paychecks and the. When they pay state and federal income tax. B. The owners of the corporation are subject to double taxation--first at the corporation level and then again at a personal level when they are give dividends. C. The supplies of the corporation are subject to double taxation--first when the corporation pays their invoices and then again when they have to pay federal taxes. D. None of he above.

Explanation / Answer

The right answer is

B. The owners of the corporation are subject to double taxation--first at the corporation level and then again at a personal level when they are give dividends.

For this reason, owners will often times reinvest in the corporation without paying themselves dividends. Or they will hire and pay themselves a salary so that it can be written off as a single expense and deducted once rather than paying dividends to themselves and being taxed twice.

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