Which of the following is a disadvantage of a corporation when compared to a partnership?
Posted: Sat Aug 07, 2021 7:04 am
A) The stockholders have limited liability.
B) The corporation is treated as a separate legal entity from the stockholders.
C) The corporation and its stockholders are subject to double taxation.
D) The corporation must account for the transactions of the business as separate and apart from
those of the owners.
Answer: C
Explanation: A corporation's income is subject to double taxation; it is taxed when it is earned
and again when it is distributed to stockholders as dividends.
B) The corporation is treated as a separate legal entity from the stockholders.
C) The corporation and its stockholders are subject to double taxation.
D) The corporation must account for the transactions of the business as separate and apart from
those of the owners.
Answer: C
Explanation: A corporation's income is subject to double taxation; it is taxed when it is earned
and again when it is distributed to stockholders as dividends.