Which of the following statements is CORRECT?
A) All corporations other than non-profit corporations are subject to corporate income taxes, which are 15% for the lowest amounts of income and 35% for the highest amounts of income.
B) The income of certain small corporations that qualify under the Tax Code is completely exempt from corporate income taxes.Thus, the federal government receives no tax revenue from these businesses.
C) All businesses, regardless of their legal form of organization, are taxed under the Business Tax Provisions of the Internal Revenue Code.
D) Small businesses that qualify under the Tax Code can elect not to pay corporate taxes, but then their owners must report their pro rata shares of the firm's income as personal income and pay taxes on that income.
E) Congress recently changed the tax laws to make dividend income received by individuals exempt from income taxes.Prior to the enactment of that law, corporate income was subject to double taxation, where the firm was first taxed on the income and stockholders were taxed again on the income when it was paid to them as dividends.

Question

Quizplus · Accepted Answer

Small businesses that meet certain qualifications under the Tax Code can elect to be taxed as pass-through entities, such as a partnership or S corporation. In this case, the business itself does not pay taxes, but the individual owners must report their shares of the business's income on their personal tax returns and pay taxes on that income.

Which of the Following Statements Is CORRECT