Question

One disadvantage of the corporate form of business ownership is the: Multiple Choice1. limited liability of its shareholders for the firm's debts.2. double taxation of distributed profits.3. firm's greater ability to raise capital than other forms of ownership.4. firm's potential for an unlimited life. 5. firm's ability to issue additional shares of stock.

Answer 1

Answer:

2. double taxation of distributed profits

Explanation:

Corporation is a business entity that is formed by the issuance, sale and purchase of shares or stock. It is owned by people known as shareholders and their liability is limited to the shares or stock held.

Considering all the options given, the only disadvantage in a corporation is double taxation of distributed profits. as the company incurs company income tax (CIT) and the dividend paid to shareholders attracts other forms of tax such as withholding tax.