Double taxation means that a corporation pays twice the amount of taxes as a sole proprietorship or partnership.

Question

Quizplus · Accepted Answer

A disadvantage of the corporate form of business ownership is double taxation. If corporations distribute after-tax profits to stockholders, these individuals are required to pay taxes on dividend income. Unfortunately, these amounts were already taxed once, when the corporation paid taxes on them, hence the term double taxation.

Double Taxation Means That a Corporation Pays Twice the Amount