Double taxation in a corporation is best described by which of the following?
A) Corporations must pay both provincial and federal taxes.
B) Corporations can double their earnings without higher taxes.
C) The corporation must pay taxes twice a year.
D) Earnings of the corporation and dividends of the shareholders are both taxed.

Question

Quizplus · Accepted Answer

Double taxation in a corporation means that the earnings of the corporation are taxed at the corporate level, and then when dividends are distributed to shareholders, they are taxed again at the individual level. This is best described by choice D, as it specifically mentions that both earnings of the corporation and dividends of the shareholders are taxed.

Double Taxation in a Corporation Is Best Described by Which