What does double taxation mean?
Double taxation is a tax principle referring to income taxes paid twice on the same source of income.
It can occur when income is taxed at both the corporate level and personal level..
What causes double taxation quizlet?
What causes double taxation? … earned by a foreign operation is the lesser of the amount of actual taxes paid to the foreign government or the amount of U.S. income tax that would have been if the income had been earned in the United States.
Which type of income is subject to double taxation quizlet?
Corporate profits can be subject to double taxation. The company pays tax on its profits, and then if the profits are passed on to the shareholders as dividends, the shareholders must also pay income tax on them.
What business has double taxation?
In the case of businesses, double taxation means a corporation is taxed at both the personal and business levels. Businesses that have double-taxed income include: Corporations (C Corps) LLCs that elect to be treated as corporations.
How do you avoid double taxation?
Avoiding Corporate Double TaxationRetain earnings. … Pay salaries instead of dividends. … Employ family. … Borrow from the business. … Set up a separate flow-through business to lease equipment or property to the C corporation. … Elect S corporation tax status.
What is double taxation example?
The term “double taxation” can also refer to the taxation of some income or activity twice. For example, corporate profits may be taxed first when earned by the corporation (corporation tax) and again when the profits are distributed to shareholders as a dividend or other distribution (dividend tax).