Question

which of the following are taxed?

○ neither corporate profits nor dividends shareholders receive
○ both corporate profits and dividends shareholders receive
○ dividends shareholders receive but not corporate profits
○ corporate profits but not dividends shareholders receive

Explanation:

In most tax systems, corporate profits are first taxed at the corporate level. Then, when after-tax profits are distributed to shareholders as dividends, those dividends are taxed again as personal income for the shareholders, creating a double taxation scenario.

Answer:

Both corporate profits and dividends shareholders receive