A) Pateht. A) The corporation pays tax on its income and the stockholders pay ta

Question

A) Pateht. A) The corporation pays tax on its income and the stockholders pay tax on their dividends B) The corporation pays tax on its income and the officers of the corporation pay tax on their 56) Double Taxation means: salaries. C) A corporation must pay double the amount of tax that an unincorporated business pays. D) A corporation pays taxes to the federal government and to the state government. 57) Assets contributed to a partnership by a partner would be recorded at: A) Cost less depreciation. C) Book value. B) Fair market value. D) Historical cost. 58) Net income in a partnership may not be distributed to the partners: A) As interest on beginning capital. C) As a salary allowance B) In a fixed ratio. D) In the form of dividends.

Explanation / Answer

Correct answer is A

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Double taxation occurs when income tax is charged twice on the same source of income.

Sometimes income tax is charges on corporate level and on personal level too.

For example, if you are a shareholder in a company, then the dividend which you will receive, you need to pay tax on it, however the company has already paid tax on its net income, so here taxa is charged twice on the single source of income.

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