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SSC Audit Tax Finance P-II QUESTION #6189
Question 1
In a corporate environment, the 'Double Taxation' disadvantage refers to:
  • Paying both state and federal taxes.
  • Taxing corporate profits and then taxing distributed dividends as personal income.✔️
  • Paying sales tax on inputs and outputs.
  • Taxing both the company and its employees' salaries.
Correct Answer Explanation
Corporations pay tax on earnings, and shareholders pay tax again on the dividends they receive [cite: 9].