Final Answer:
Double taxation is a major drawback to the (b) Corporation form of business organization.
Step-by-step explanation:
The corporation form of business organization is subject to double taxation, which means that the corporation itself is taxed on its profits, and then shareholders are also taxed on the dividends they receive. The corporate entity is treated as a separate taxpayer from its owners, resulting in a potential disadvantage compared to other business structures. This double taxation can significantly reduce the after-tax profits available to shareholders and is considered a drawback, especially when compared to pass-through entities like partnerships and limited liability companies (LLCs).
In a corporation, profits are first taxed at the corporate level, and then when these profits are distributed to shareholders as dividends, they are taxed again at the individual level. This dual layer of taxation can result in a higher overall tax burden on corporate income. In contrast, other business structures, such as partnerships and LLCs, are pass-through entities where profits are only taxed at the individual level, avoiding the issue of double taxation.
In summary, while the corporation offers benefits like limited liability and ease of transferability of ownership, the drawback of double taxation is a significant consideration for businesses, making other forms of organization, such as partnerships or LLCs, more tax-efficient in certain situations.
Correct option is (b) Corporation form of business organization.