Income earned by C corporations is taxed twice, once when the income is earned and again when it is distributed. If so, how is it possible that operating a business as a C corporation can reduce taxes. A. It is not possible to reduce taxes in a C corporation, double taxation is a disadvantage of this type of corporation. B. Up to $100,000 of income earned by a C corporation is taxed at 15%, whereas a sole proprietorship's income is taxed at the owner's marginal tax rate, which will be higher than 15%. C. The 21% tax rate that applies for C corporations. If an individual with a significant amount of other income operates a new business as a sole proprietorship, that income is taxed at the owner's marginal tax rate, which may be higher than 21%. Thus, the current tax can be reduced if the corporate form is used and income is retained in the corporation. This advantage will be reduced (and possibly reversed) if the corporation distributes the income. D. The C corporation should deduct all distributions as salary expense to reduce taxable income, therefore reducing the taxes