Which of the Following Best Describes How Corporations Are Taxed

question 138

Multiple Choice

Which of the following best describes how corporations are taxed on dividend income?

• A)Like individuals, corporations are taxed on all dividends received.
• B)Fifty percent of dividend income received by corporations is tax exempt.
• C)Varying amounts of dividend income received by corporations are tax exempt, depending on the percent of the paying corporation that the receiving corporation owns.
• D)In order to avoid triple taxation of earnings, dividend income received by one corporation from another in which it owns twenty percent stock is 100% tax exempt.

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Definitions:

Sherman Act

An antitrust law enacted in the United States to prevent monopolistic practices and promote competition among businesses.

Per Se Violation

A legal principle whereby an action is considered illegal in itself, without the need to prove harm or intent.

Medical Device Makers

Companies specialized in the design, manufacture, and sale of medical devices used in healthcare treatment, diagnosis, or prevention.

Monopolization

The process or state where a company gains the ability to raise prices or exclude competitors, effectively controlling the market.