Disadvantages of holding companies include ________.
A) high dollar investment
B) acquisition of significantly lesser amount of assets
C) legal responsibility for subsidiaries
D) double taxation

Question

Quizplus · Accepted Answer

Holding companies are subjected to double taxation, meaning that they are taxed on their earnings, and their subsidiaries are also taxed on their earnings. This results in a disadvantage for holding companies as this could lead to a decrease in profits. Options A and B are incorrect because a holding company can have varying levels of investment and assets. Option C is partly true, but holding companies also have legal advantages, such as limited liability, as they are separate legal entities.

Disadvantages of Holding Companies Include ________