Briefly describe the concept of double taxation. Particularly explain how corporations are subject to double taxation while a sole proprietorship is not subject to double taxation.
Question: Briefly describe the concept of double
My Answer: Double taxation is when tax is payable twice on earned income from the same source. Corporations are subject to double taxation due to having dividend distributions where Corporations pay tax at the time income was earned and at the time dividend distribution from the same source. However, Sole Proprietorships are not subject to double taxation due to income earned is not distributed like in a Corporation and therefore tax is paid only once at time earned.
Anything I am missing or inaccurate? Thank you in advance!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
