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Which of the following does not correctly describe the primary relationship between a corporation and a...

Which of the following does not correctly describe the primary relationship between a corporation and a shareholder? Multiple Choice If the corporate profits are distributed as dividends, the dividends are included in the shareholder's net income for tax purposes. Profits earned by the corporation are subject to income tax that is the first level of taxation on the income. If the corporate profits are retained, the unrealized gain on share value is included in the shareholder's taxable income. The after-tax profits can either be retained by the corporation or distributed to the shareholders.

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If the corporate profits are retained, the unrealized gain on share value is included in the shareholder's taxable income.

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