Respuesta :
Double taxation to shareholders of distributed earnings and dividends, is a disadvantage of the corporate form of business.
Due to the movement of funds from the corporation to the shareholders when a company chooses to pay out dividends, the government taxes the earnings twice.
The business is first taxed at year's end when it is required to pay taxes on its profits. When the shareholders get dividend payments from the business's post-tax profits, a second tax is levied.
The shareholders pay taxes twice: once as owners of a business that generates profits and once as individuals who are required to pay income taxes on their individual dividend income.
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