Dividend income earned by a proprietorship, partnership, S corporation, or C corporation is reported by the owners on their personal tax returns as dividend income.

Question

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Dividend income earned by a C corporation is not reported by the owners on their personal tax returns as dividend income. Instead, it is taxed at the corporate level, and dividends distributed to shareholders are taxed again on the individual's return, leading to double taxation. However, for a proprietorship, partnership, and S corporation, income, including dividends, is passed through to the owners and reported on their personal tax returns.

Dividend Income Earned by a Proprietorship, Partnership, S Corporation, or C