What does it mean for a corporation to be taxed twice?
A) The customers pay taxes on the products and services they purchase and then the corporation pays taxes on its profits.
B) The corporation pays taxes on its profits and then is also taxed on the dividends it sends to its shareholders.
C) The shareholders pay taxes on the products and services they sell and then the customers pay taxes on the dividends they receive.
D) The corporation pays taxes on its profits and the shareholders pay taxes on the dividends they receive.
E) The shareholders split the taxes on the profits among them and also pay taxes on the dividends they receive.
Answer: D
Explanation: D) The corporation pays taxes on the profits it receives before they are distributed (as dividends) to the shareholders. Then each shareholder has to pay personal income taxes on the payments he or she receives from the corporation.
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