Shareholders in a corporation are obligated to pay income tax twice on one stream of income in a process called double taxation. Other than personal income taxes, which type of tax must shareholders pay? a) Self Employment Tax b) Corporate Dividend Tax c) Federal Income Tax d) Capital Gains Tax
Shareholders in a corporation are obligated to pay income tax twice on one stream of income in a process called double
| a) | Self Employment Tax | |
| b) | Corporate Dividend Tax | |
| c) | Federal Income Tax | |
| d) |
The government taxes earnings twice if a firm chooses to distribute dividends since the money is transferred from the corporation to the shareholders. The first time a firm is taxed is when its fiscal year comes to a conclusion and taxes on its profits are due. When the shareholders get dividend payments from the business's post-tax profits, a second tax is levied. The shareholders pay taxes twice: once as owners of a business that generates profits and once as individuals who are required to pay income taxes on their individual dividend income.
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