What term describes the taxation of earnings to both the corporation and the stockholders when dividends are received?

The term that describes the taxation of earnings at both the corporate level and again at the individual level when dividends are distributed to stockholders is known as double taxation. This phenomenon occurs because the corporation first pays income tax on its earnings before those earnings are distributed to shareholders in the form of dividends. When shareholders receive these dividends, they must then pay personal income tax on the dividend income they receive.

Double taxation is a significant characteristic of the corporate structure in the United States and many other jurisdictions, as it affects the overall tax burdens placed on corporate profits. This concept is essential for understanding the implications of corporate taxation and the decisions made by corporate entities concerning dividend policies.

Other terms, such as single taxation, would imply that the earnings are taxed only once, which does not accurately describe this scenario. Capital gains taxation refers specifically to the tax imposed on the profit from the sale of an asset, while dividend taxation simply describes the tax on dividends without conveying the essential notion of the taxation occurring at both the corporate and individual levels.