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double taxation |
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Double taxation Government taxation of the same money twice; specifically, earnings taxed first at the corporate level and then again as dividends at the stockholder level. Double Taxation A situation in which the same earnings are taxed twice. One of the most common examples of double taxation occurs when a publicly-traded company pays corporate taxes on its earnings. It then passes on some of those earnings to shareholders as dividends, on which they must pay individual income tax or capital gains tax. Various means exist to reduce double taxation. See also: Tax avoidance.
double taxation A situation said to exist when a corporation must pay taxes on income, make dividend payments to shareholders on after-tax dollars, and then the shareholders must again pay taxes on the dividends. This is the situation with normal corporations, called C-corporations, that do not qualify for S-corporation (small corporation) status. S-corporations file reports allocating pro rata shares of all income to the individual shareholders, who then pay taxes on that number. The corporation itself does not pay any taxes. Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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