Which statement best describes the concept of the double taxation of corporate income?
A)Corporate income is subject to two levels of taxation: the regular tax and the alternative minimum tax.
B)Corporate income is taxed twice at the corporate level: first when earned and then a second time if appreciated property is distributed to a shareholder.
C)Corporate income is taxed when earned by a C corporation and then a second time at the shareholder level when distributed as a dividend.
D)Corporate income is subject to two levels of taxation: at the federal level and a second time at the state level.

Question

Quizplus · Accepted Answer

The concept of double taxation of corporate income refers to the fact that corporate income is taxed at the corporate level when earned and then a second time at the shareholder level when distributed as a dividend. This occurs because C corporations are separate legal entities from their owners, meaning that profits are taxed at the corporate level before they are distributed to shareholders as dividends, which are then taxed again as income for the shareholder.

Which Statement Best Describes the Concept of the Double Taxation