Explain the phrase “corporations are subject to double taxation.” Is this true for all corporate forms? Explain the phrase “taxed as a pass through entity.”
Answer to relevant QuestionsExplain the “check the box” election. Prior to this election, how did the IRS determine whether a business was taxed at the entity level or as a pass through entity? Compare and contrast a policy of a. Excluding dividends from taxation for individual taxpayers. b. Allowing firms a tax deduction for dividends paid. c. A dividend tax imputation system where receive a tax credit for ...Why might one group of investors prefer the corporate form, whereas another group of investors prefers the partnership form? What rate k, the percentage of dividends that are franked in a dividend tax imputation system, would equate to a tax rate of 15%? If necessary, assume the 2003 top tax rates. What is clientele based arbitrage? Provide an example of such a strategy. Is clientele based arbitrage restricted to high tax bracket taxpayers?
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