Final answer:
Borrowing money from a shareholder is not an effective strategy for mitigating double taxation on its own, as it provides capital but does not reduce taxable income or distribute profits in a tax-advantaged way unlike paying salaries, leasing property, or providing benefits to shareholder-employees.
Step-by-step explanation:
The question revolves around strategies to mitigate the double taxation faced by C corporations. Double taxation refers to the situation where the business itself is taxed on its profits, and then shareholders are taxed again on dividends they receive.
The strategies listed, such as paying a salary to a shareholder-employee, leasing property from a shareholder, paying fringe benefits to a shareholder-employee, help mitigate this double taxation by allowing money to flow from the corporation to the shareholders in forms other than dividends, which would be subject to taxation again at the personal income tax level.
However, borrowing money from a shareholder is not an effective strategy for mitigating double taxation on its own. While it may provide the corporation with capital, it does not reduce the double taxation issue because the borrowed money will eventually need to be paid back and is not a deductible expense that would reduce the corporation's taxable income.