How does the taxation of a corporation differ from that of a sole proprietorship and partnership?(1 point)

Question

Responses

Taxes are said to pass through the corporation and onto owners.
Taxes are said to pass through the corporation and onto owners.

The earnings of shareholders are taxed directly.
The earnings of shareholders are taxed directly.

The corporation is taxed, and then shareholders are additionally taxed.
The corporation is taxed, and then shareholders are additionally taxed.

The corporation pays no tax.

Answer 1

The correct response is:

The corporation is taxed, and then shareholders are additionally taxed.

This refers to the concept of double taxation, where a corporation's profits are taxed at the corporate level, and then any dividends distributed to shareholders are taxed again at the individual level. This differs from sole proprietorships and partnerships, where income is typically passed through to the owners and taxed only once at the individual level.