Question

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 shareholder/employee of corporation

Answer 1

Compensation paid to shareholder/employee of corporation is a form of earnings distribution that is not subject to double taxation at the corporate and shareholder level.

Step-by-step explanation:

Out of the options listed, the form of earnings distribution that would not be subject to double taxation at the corporate and shareholder level is compensation paid to shareholder/employee of corporation. Unlike dividends, stock redemption, and partial liquidation which are all subject to taxes at both the corporate and shareholder levels, compensation paid to a shareholder/employee is only taxed once at the individual level.