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

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.

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.