Doesn a C corporation have double taxation?
A. Yes, but only in two areas. The first area involves the payment of dividends. All dividends are paid to shareholders from the after tax income of the corporation. Then the shareholder pays personal income taxes on the dividends received. Double taxation occurs again during dissolution of a corporation. After all debts and corporate taxes are paid, the shareholders receive their return on investment. Any amount received by the shareholders above their initial investment is considered taxable income.
