Question

What does double taxation mean? A. nonprofit organizations are exempt from paying either income taxes or property taxes. B. for-profit businesses must pay both income taxes and property taxes. C. sole proprietorships and partnerships pay both personal income taxes and business income taxes. D. corporations pay income taxes on their profits, and stockholders pay taxes on their dividends.

Answer 1

The correct answer is Choice D - Corporations pay income taxes on their profits, and stockholders pay taxes on their dividends.

Double taxation is one of the biggest downfalls of a corporation because of the fact that both the corporation and the owners both pay taxes on the same earnings.