alleryA company pays tax on its profits, then shareholders pay tax again on the dividends. This drawback is called:
ADivided taxation
BDelayed taxation
CDouble taxation
DDeferred taxation
Answer & Solution
Correct answer: C. Double taxation
1. The same earnings are caught twice by the tax system.
2. Once in the company's hands and once in the owners' hands.
3. That drawback is double taxation.
_Source: OpenStax Principles of Financial Accounting, Chapter 2, Introduction to Financial Statements._
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