Which of the following forms of earnings distributions would not be subject to double taxation at the corporate and shareholder level?
A)Dividend
B)Stock redemption
C)Partial liquidation
D)Compensation paid to a shareholder/employee of the corporation.

Question

Quizplus · Accepted Answer

Compensation paid to a shareholder/employee of the corporation is considered an expense for the corporation and is deductible, thus not subject to double taxation. Dividends, stock redemptions, and partial liquidations are typically subject to double taxation, first at the corporate level and then at the shareholder level when distributed.

Which of the Following Forms of Earnings Distributions Would Not