Asked by Michael Petropulos on Apr 30, 2024
Verified
Which of the following is true regarding André's assertion regarding taxes?
A) André is correct insofar as the corporation would be required to pay taxes on its profits, and the shareholders would also be required to pay taxes on dividends.
B) André is incorrect because all businesses are taxed in the same manner.
C) André is incorrect but only because the law involving taxation of corporations does not apply until there are at least 10 shareholders.
D) André is incorrect but only because the law involving taxation of corporations does not apply until there are at least 75 shareholders.
E) André is correct but only because his proposal does not involve a writing and the filing of paperwork with the secretary of their state.
Double Taxation
A situation where the same income is taxed twice, typically once at the corporate level and again at the personal level when distributed as dividends.
Corporation
A legal entity that is separate and distinct from its owners, who are shareholders, and has its own rights, privileges, and liabilities.
Shareholders
Individuals or entities that own one or more shares of stock in a corporation, giving them a right to a portion of the corporation's profits.
- Recognize the traits and advantages of S corporations, focusing on their fiscal benefits.
Verified Answer
RR
Rameela RatnavarathanMay 03, 2024
Final Answer :
A
Explanation :
André is correct insofar as the corporation would be required to pay taxes on its profits, and the shareholders would also be required to pay taxes on dividends. This is known as double taxation, which is a characteristic feature of corporations.
Learning Objectives
- Recognize the traits and advantages of S corporations, focusing on their fiscal benefits.