Question

How many times is income from a C corporation taxed if a retirement fund is the

owner of the corporation's stock? Explain.

Answer 1

Income from a C corporation is taxed twice if a retirement fund is the owner of the corporation's stock.

Step-by-step explanation:

When a retirement fund is the owner of a C corporation's stock, the income from the corporation is taxed twice. The C corporation itself is subject to corporate income tax on its profits. Then, when the corporation distributes dividends to the retirement fund, those dividends are also taxed as ordinary income to the retirement fund.

For example, let's say a C corporation earns $100,000 in profits. The corporation will have to pay corporate income tax on this amount. Then, if the corporation decides to distribute $80,000 as dividends to the retirement fund, the retirement fund will have to pay tax on this $80,000 as ordinary income.

So, in this scenario, the income from the C corporation is taxed twice - once at the corporate level and once at the individual level for the retirement fund.