Question

John owns 500 shares of stock in Catawba Box, Inc. The company has recently announced the results for the quarter. The company earned a significant profit. Based on the form of ownership, the profit the company earns

Answer 1

Bsed on the form of ownership, the profit the company earns may be subject to double taxation. Double taxation is when a person or company is subject to having double income taxes charge on the same earned income. When this happens, taxes happen at both the corporate level and personal level.

Answer 2

Based on the form of ownership John will receive dividend from the company. Also the company and John have to pay taxes separately because according to companies ordinance company is a separate legal entity. So company will pay tax on its profit and the owner (John) will pay tax on the dividend he will receive.