You inherited 500 shares of IBM stock from your Great Aunt Mildred. As you contemplate selling the shares, your accountant informs you that the company pays a generous dividend, and advises you to start watching the firm’s profits. When you are awarded the first dividend, you learn that it is considered a source of income and you will be taxed on that amount. You find this bothersome because the firm paid the dividend from after-tax profits. (These dollars were already taxed.) This phenomenon is calledMultiple Choiceentitlement tax.corporate taxation adjusting.double taxation.shareholder tax penalty points.

1) In 2011 you purchased $1500 of IBM stock and you sold it this year for $1200.  Since you lost money on this transaction, there is no valid reason to include this on this year's tax return.2) In 2005 you purchased a stamp collection for $75 and you sold it this year for $150.  Legally, you don't need to pay any taxes on this transaction.3) Adjusted gross income is your total gross income adjusted for inflation.4) Bracket creep refers to an increase in marginal taxes caused by the impact of inflation.5) Only people in the higher tax brackets pay taxes on capital gains.6) For most tax payers, their average tax rate is lower than their marginal tax rate.7) If you are in a 25 percent tax bracket then every dollar of your adjusted gross income will be taxed at 25 percent.8)  A progressive tax rate is one that decreases as you make more income.9) The impact of taxes are an important consideration in most of the financial decisions that you will make.10) Shawan is a single person with no dependents.  She normally receives over $1800 every year for an income tax refund.  She is having difficulty paying her monthly bills every month.  What tax advice would you give her?A) She should increase her exemptions on her W-4 form at work.B) She should pay her estimated taxes every quarter.C) She needs to find some more tax deductions.D) She needs to file as Head of Household status1

The income of a corporation is taxed twice, first as corporate income and then as personal income to shareholders who receive cash dividends.Group startsTrue or False

Which of the following statements is  NOT correct?A.One cannot tax both  the company and the shareholder for the same profit.B.Companies had paid 30% tax before distributing their dividends.C.The tax already paid by the company will offset the shareholder taxes that are due.D.The shareholder needs to include the dividend after tax into his or her taxable income.

Multiple Choice QuestionWhen a corporation pays a tax on its profits and individual stockholders each pay tax on dividends distributed by the corporation, it is called ______.Multiple choice question.double taxationa stock optionreturn taxessplitting the stock

A major advantage of the corporate form of ownership is ______.Multiple choice question.that corporate earnings aren't taxed until they are distributed to owners as dividendsease of formationlimited legal liabilitylimited lifeunlimited legal liability