Goodbiz Enterprises earns profits of $10 million during the year, and retains all of these profits. None are distributed to owners. Which of the following types of owners would not have to pay any taxes, on his or her individual tax returns, related to these undistributed earnings?

Question

Quizplus · Accepted Answer

Shareholders of a C corporation do not pay taxes on undistributed earnings of the corporation. Instead, the corporation itself pays taxes on its profits, and shareholders are only taxed on dividends they actually receive.

Goodbiz Enterprises Earns Profits of $10 Million During the Year