Double Taxation
Wonder Boy, Inc. was incorporated 25 years ago and the initial 5 stockholders did not think to limit the transferability of corporate shares. The company owns land as well as collects rents from farmers who produce crops on it. So, through deaths, gifts, inheritances and divorces the current number of shareholders equals 135 people, few of whom are minors. The board of directors has acknowledged many complaints over the fact that the corporation pays an income tax then when dividends are paid to the stockholders (approximately half of the company's profits), they are as well taxed. This double taxation is somewhat most of the stockholders would like to avoid. A few hippies, but, don't care about the taxes they think it is a good impression for the government to get more revenue. What actions would you propose the board of directors take to avoid this double tax problem?