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Is the following statement true or false and why? 1. Corporations have a distinct advantage over...

Is the following statement true or false and why?

1. Corporations have a distinct advantage over other forms of business organization in the area of taxation.

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Answer #1

Ans - FALSE

Corpoorations as compared to Sole proprietorship or Partnership, though have various features such as Perpetual existence, Separate legal entity distinct from its members etc, yet is also subject to Corporate income tax. In case of 'C corporations' which are taxed at corporate level using corporate income tax rates, and they have subject to 'double taxation' because apart from Taxes paid by corporation on its income, owners also have to pay taxes on dividends received by them. Even the salary drawn from corporation is subject to Income tax.
In case of 'S corporation', they are not subject to corporate tax but are treated just like LLC where the income or loss of business is passed through the company to the shareholders or Owners of the company.
Thus it is not true that Corporations have a distince advantage over other forms of business when it comes to taxation.

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