Which Statement Best Describes the Concept of the "Double Taxation

question 58

Multiple Choice

Which statement best describes the concept of the "double taxation" of corporation income?

• A) Corporate income is subject to two levels of taxation: the regular tax and the alternative minimum tax.
• B) Corporate income is taxed twice at the corporate level: first when earned and then a second time if appreciated property is distributed to a shareholder.
• C) Corporate income is taxed when earned by a C corporation and then a second time at the shareholder level when distributed as a dividend.
• D) Corporate income is subject to two levels of taxation: at the federal level and a second time at the state level.

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Definitions:

Medium of Exchange

This refers to an item that is widely accepted in exchange for goods and services, facilitating trade by averting the inefficiencies of a pure barter system.

Fractional Reserve Banking

A banking system where banks hold a fraction of deposits as reserves and use the rest for lending purposes.

Total Deposits

The sum of all money deposited in a bank by its customers.

Total Reserves

The sum of a bank's deposits held in reserve at a central bank plus its cash on hand, used to satisfy demand for withdrawals or to meet regulatory requirements.