The term "double taxation" refers to which of the following? A sole proprietorship must pay...
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The term "double taxation" refers to which of the following? 1) A sole proprietorship must pay income taxes on its net income and the owner is also required to pay income taxes on withdrawals. 2) In a partnership, both partners are required to claim their share of net income on their tax returns. 3) Corporations must pay corporate income taxes on their net income, and their stockholders must pay income taxes on their dividends. 4) A sole proprietorship must pay income taxes to both the state and federal government.
Application of Double Taxation
What type of business formation one should consider when starting a business is an important consideration. The various types of business format which a business can be originally formed under include: a corporation; a partnership; and a sole proprietorship, among others. When making this decision which type of business to form, it is important to understand the tax implications of each alternative, including the impact on one's personal income taxes of each alternative, too. This Question brings the tax implications of the various types of business format and formation alternatives to you, so you can see which format results what is called 'double taxation' (profits of the business are taxed at both the corporate level and the personal level), and which format does not result in double taxation.
Answer and Explanation: 1
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View this answerThe term "double taxation" refers to which of the following?
1) A sole proprietorship must pay income taxes on its net income and the owner...
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Tax Structure & Liability of Sole Proprietorships
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Chapter 14 / Lesson 1
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A sole proprietorship is a business owned by a single person. Define sole proprietorship and discover how it differs from other tax structures. Learn about the tax structure, liability, and accountability expectations of sole proprietorships.
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