Glossary

Double Taxation

The taxation of income twice, once at the corporate (entity) level as income tax and once at the individual level, when dividends are paid to shareholders.

Example

Dividends, which are paid out of after-tax corporate profits, are double taxed when individuals have to pay taxes on them as well. Double taxation only occurs within C Corporations.

See Also

C Corporation, dividend, goodwill.

Tips

Goodwill may not be subject to double taxation if the goodwill is owned by the shareholders on a personal basis.

Related Resources

M&A Basics | Allocation of Purchase Price

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