If individual taxpayers are the shareholders of PST Corporation and PST Corporation is a shareholder of MNO Corporation, how many levels of tax is MNO's pretax income potentially exposed to?
A)No taxation.
B)Single taxation.
C)Double taxation.
D)Triple taxation.

Question

Quizplus · Accepted Answer

MNO Corporation's pretax income is potentially exposed to triple taxation: first at the corporate level when MNO earns the income, second at the corporate level again when PST Corporation receives dividends from MNO (though some relief may be available through dividend received deductions), and third at the individual level when PST Corporation distributes its income to its individual shareholders.

If Individual Taxpayers Are the Shareholders of PST Corporation and PST