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 pre-tax income potentially exposed to?
A) No taxation.
B) Single taxation.
C) Double taxation.
D) Triple taxation.

Question

Quizplus · Accepted Answer

MNO will have to pay taxes on the amount of pre-tax income it earns. Then, if MNO pays a dividend to PST, the income will be taxed a second time. If PST pays a dividend to its individual shareholders, the income will be taxed a third time.

If Individual Taxpayers Are the Shareholders of PST Corporation and PST