Originally Posted by Warfish
I have no idea how you could become so wealthy with such an inaccurate understanding of the way Corporations work.
No sir, it's not yours. You have (via stock ownership) a claim on assets ONLY if the Corporation ends, and less their outstanding liabillities. You cannot walk your stock certificate up to IBM and ask them for $100 woth of stuff in exchange for the stock on your demand.
The Corporation, and yourself, are two absolutely disstinct legal entities. You are not, in fact, an "owner" in the way your're claiming simply because you won stock, and the profit is not yours (the Corporation is under no obligation to issue a dividend).
If the system worked as you claim, where their profits are yopur profits, the reverse would also be true, their liabillities would be your liabillities, and when a company went out of business, you (as the supposed owner) would have to pony up your own personal assets to make good any liabillities outstanding at the time of termination......which clearly does not occur.
And income the business makes is not yours in any legal form until such time as they choose to issue a dividend. Then and only then does the money become income for you.
You're not being taxed twice anymore than my paycheck is taxed twice. I am not my employer, and you are not IBM just because you won a few shares.
Actually I have a very good idea how corporations work.
No I can't go up to IBM and get product. Or any other company. But a piece of the ownership IS mine.
If the company ends (bankruptcy), the liabilities outweigh assets and the BONDHOLDERS have first claim, after primary debt holders. Stockholders get 0. Hence risk. And dividends are a partial reward for risk.
Yes, a corporation is set up with various charters to protect individuals. Size has nothing to do with it. Nor the number of owners.
I, along with others, DECIDE who runs my company.
Let's say it's PD Enterprises. Market cap (stock value) of $10mill. on day one. Of that $2 million is my capital - $8mill someone elses. I own 20%.
Profit year one is $1mill. 20% of that is theoretically mine.
The tax on it is @34%. So PAT is $660k. I paid $68k basically.
If there is a dividend from the $660, I and others pay again.
What if the stock was 100% in my hands. Same situation.
Simplified but the way it is.