Final answer:
Corporate profits are taxed when B. corporations pay taxes on their profits. as separate legal entities, corporations are required to pay income taxes on the profits they earn during the year.
Step-by-step explanation:
Corporate profits are taxed when corporations pay taxes on corporate profits. This means that option B, Corporations pay taxes on corporate profits, is the correct answer. As separate legal entities, corporations are required to pay income taxes on the profits they earn during the year. Corporate income taxes are considered one of the largest categories of taxes that the federal government collects.
These taxes are imposed on the net profits of the corporation and are usually determined similarly to how taxable income for individuals is calculated. Individuals can pay taxes through corporate dividends, which are distributions to shareholders of a portion of the residual profits, in addition to corporations paying taxes on profits.