Income, Not Dividends, Double-Taxed

BY RICHARD P. CREAGH

I read with interest “ An Opinion on Dividends’ Taxation ” and the claim that dividends are not double-taxed. While I agree the dividends are not double-taxed, the income, however, is.

The corporation pays tax on its earnings and then the stockholder pays tax when dividends are paid by the corporation (out of aftertax profits) and included as income in the stockholder’s tax return.

One other point: The corporation’s board of directors, not management, declares dividend amounts.

Richard P. Creagh, CPA
Brea, California

SPONSORED REPORT

6 key areas of change for accountants and auditors

New accounting standards on revenue recognition, leases, and credit losses present implementation challenges. This independently-written report identifies the hurdles that accounting professionals face and provides tips for overcoming the challenges.

PODCAST

How tax reform will impact individual taxpayers

Amy Wang, a CPA who is a senior technical manager for tax advocacy at the AICPA, answers to some of the most common questions on how the new tax reform law will impact individual taxpayers.