Question

Which of the following companies will experience double taxation because it is taxed as a separate legal entity?

Answer 1

Answer:

A C corporation

Explanation:

C Corporation are the most common type of large corporation in the United States, and they have many advantages, mainly being able to raise large amounts of capital from anonymous sources, and outliving the owners.

However, the main disadvantage of a C Corporation is that they are subject to double taxation. This is because they are taxed on corporate income, and the stockholders are taxed on the dividends they earned once the firm's profit is distributed.