Asked by Mikaela Forcum on May 22, 2024
Verified
Double taxation of earnings is the primary financial disadvantage of the corporate form of business organization.
Double Taxation
The imposition of taxes on the same income, asset, or financial transaction at two different levels, such as corporate income and then again as shareholder dividends.
Corporate Form
A legal structure for organizations that allows them to operate as separate legal entities from their owners, with the ability to hold assets, sue, and be sued.
- Grasp the tax implications of different corporate structures.
Verified Answer
YS
Yashpal singhMay 26, 2024
Final Answer :
True
Explanation :
This is because the corporation is considered a separate legal entity from its owners, and as such it must pay taxes on its earnings. Then, shareholders who receive dividends from the corporation also pay taxes on their individual income tax returns, resulting in double taxation of the same income.
Learning Objectives
- Grasp the tax implications of different corporate structures.
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