Classnotes Corporate Double Taxation

Classnotes - shareholders who own the corporation which has already paid corporate income tax on those same profits For privately-held corporations

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
DOUBLE TAXATION OF CORPORATE INCOME There is much discussion about the “double taxation” of corporations. Here’s how it works. Gross Corporate Income - Allowable Deductions = Taxable Corporate Income - Income Taxes = Net Corporate Profit Directors may decide to distribute some (or all) of the corporate profit to the shareholders (the owners of the corporation) as a dividend. The dividend is then TAXABLE AGAIN as personal income to the individual
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: shareholders who own the corporation which has already paid corporate income tax on those same profits. For privately-held corporations, this can be a significant financial liability. For publicly- held corporations, it’s an irrelevant fact of life. The single-taxation of LLC's, by treating the LLC as a partnership for tax purposes and assigning tax liability directly to the owners, avoids this "double taxation"....
View Full Document

This note was uploaded on 10/24/2011 for the course ACCT 351 taught by Professor Staff during the Spring '08 term at University of Delaware.

Ask a homework question - tutors are online