A disadvantage of corporations is that they are subject to ________, which means that a corporation is taxed on its net income and when the same income is distributed to shareholders in the form of dividends it is taxed again on shareholders' personal income tax returns.
A) double taxation
B) dual toll
C) double duty
D) double assessment
E) dual harm

Question

Quizplus · Accepted Answer

Double taxation is the term used to describe the situation where a corporation is taxed twice, once on its net income and then again when the same income is distributed to shareholders in the form of dividends and taxed on their personal income tax returns. This can be a significant disadvantage for corporations, as it reduces the amount of money available for distribution to shareholders and can make it less attractive for investors to invest in the corporation.

A Disadvantage of Corporations Is That They Are Subject to ________