Complex sentence: Shareholders of most corporations are not taxed directly on corporate income, but must pay tax on dividends paid by the corporation; however, shareholders of S Corporations and mutual funds are taxed currently on corporate income and do not pay tax on dividends.
Split into simpler sentences: Shareholders of most corporations are not taxed directly on corporate income, but must pay tax on dividends paid by the corporation. However, shareholders of S Corporations and mutual funds are taxed currently on corporate income, and do not pay tax on dividends.