Question

List four basic tax planning strategies that corporations and shareholders can use to

mitigate double taxation of a C corporation's taxable income.

Answer 1

Corporations and shareholders can use income shifting, dividend policies, capitalization strategies, and tax credits and incentives to mitigate double taxation of a C corporation's taxable income.

Step-by-step explanation:

Corporations and shareholders can use several tax planning strategies to mitigate double taxation of a C corporation's taxable income:

1. Income shifting: Corporations can minimize their tax liability by shifting income from higher-tax jurisdictions to lower-tax jurisdictions. This can be achieved by strategically locating subsidiaries or operations in jurisdictions with lower tax rates.
2. Dividend policies: Corporations can manage their dividend policies to distribute profits to shareholders in a tax-efficient manner. This can involve timing dividends to minimize the impact of individual income taxes.
3. Capitalization strategies: Corporations can use capitalization strategies to structure their financing in a way that maximizes tax deductions and minimizes tax liabilities. This can include utilizing debt financing instead of equity financing.
4. Tax credits and incentives: Corporations can take advantage of tax credits and incentives offered by governments to reduce their overall tax burden. These can include credits for research and development, investment in certain industries, or job creation.