BUISENESS MANAGEMENT
TAXES
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -Dividend Payments Profit distributions to stockholders are called dividends. Dividends must be distributed in equal amounts per share. Most small corporations have one class of stock, called common stock, so all stockholders get the same dividend distribution at the same time.
Detailed explanation-2: -This improperly accumulated earnings tax (IAET) is imposed as a penalty on corporations which allow accumulation of earnings for the purpose of avoiding tax liability for their shareholders if they decide to distribute profits in the form of dividends.
Detailed explanation-3: -If a company does not distribute any dividends by keeping a portion of retained earnings as accumulated earnings, shareholders are able to avoid this tax. Companies that retain earnings typically experience higher stock price appreciation.
Detailed explanation-4: -A publicly-listed corporation or a corporation owned directly or indirectly by a publicly-listed corporation is not automatically exempt from IAET.