Tasha's T-Shirts Inc. made $500,000 profit last year. That profit will be taxed at the company's tax rate. Tasha will then reinvest those after-tax profits back into the business to avoid paying an additional tax on dividends. What is the term for this type of taxation?

Question

Quizplus · Accepted Answer

This is known as corporate taxation, where the profits of a corporation are taxed before being distributed as dividends to shareholders. By reinvesting the after-tax profits back into the business, Tasha is avoiding paying additional tax on dividends.