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Profits distributed to owners thereby transfer burden?

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Can company profits be distributed directly to owners thereby transferring the tax burden? Why or why not?

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Your tutorial is 253 words and explains two circumstances when the profits are distributed directly to owners, transferring the tax burden to them completely. A sample form is attached and you are guided through the major sections.

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Yes, profits can be distributed directly to owners, transferring the tax burden directly to the owners, if the ownership structure is a sole proprietorship or a partnership. Corporations are considered their own separate entity and so they are taxed on their profits, whether they are distributed or not. Then, of course, any distributions from corporations (except upon dissolution) are taxed again as dividends. This leads to the term "double taxation" on ...

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Carol Sargent, PhD
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  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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