Question 1

The Wayfair decision held that an out-of-state mail-order company did not have sales tax collection responsibility because it lacked physical presence.

Accepted Answer

A) True 
 B)False

Question 2

Della Corporation is headquartered in Carlisle, Pennsylvania. Della has a Pennsylvania state income tax base of $425,000. Of this amount, $75,000 was nonbusiness income. Della's Pennsylvania apportionment factor is 28.52 percent. The nonbusiness income allocated to Pennsylvania was $61,000. Assuming a Pennsylvania corporate tax rate of 7.75 percent, what is Della's Pennsylvania state tax liability? (Round your answer to the nearest whole number.)

Accepted Answer

A)  $8,821 
B)  $9,084 
C)  $12,464 
D)  $13,549 
A)  $8,821 
B)  $9,084 
C)  $12,464 
D)  $13,549

Question 3

Mighty Manny, Incorporated, manufactures and services deli machinery and distributes it across the United States. Mighty Manny is incorporated and headquartered in New Jersey. It has product sales in all 50 states. New Jersey is the only state in which Mighty Manny exceeds the Wayfair sales thresholds. Mighty Manny's service employees work in Connecticut, New Jersey, New York, Pennsylvania, and Rhode Island. Mighty Manny also has an executive training seminar each year in South Carolina. Determine the states in which Mighty Manny has sales tax nexus.

Accepted Answer

Connecticut, New Jersey, New York, Penns

Question 4

The property factor is generally calculated as being the average of the beginning and ending property values.

Accepted Answer

A) True 
 B)False

Question 5

Businesses must collect sales tax only in states where they have sales tax nexus.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following isn't a requirement of Public Law 86-272?

Accepted Answer

A)  The tax is based on net income. 
B)  The taxpayer sells only tangible personal property. 
C)  The taxpayer is an intrastate business. 
D)  The taxpayer is nondomiciliary. 
A)  The tax is based on net income. 
B)  The taxpayer sells only tangible personal property. 
C)  The taxpayer is an intrastate business. 
D)  The taxpayer is nondomiciliary.

Question 7

Which of the following isn't a typical federal/state adjustment?

Accepted Answer

A)  Dividends received deduction. 
B)  Depreciation. 
C)  Meals. 
D)  U.S. obligation interest income. 
A)  Dividends received deduction. 
B)  Depreciation. 
C)  Meals. 
D)  U.S. obligation interest income.

Question 8

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis Pro has payroll as follows:
   The other total includes $10,000 of salary of a Virginia employee that works part time in another state. What is Tennis Pro's Virginia payroll numerator and payroll factor? (Round the payroll factor to two places.)

Accepted Answer

$260,000 and 55.85 percent.
$2

Question 9

Roxy operates a dress shop in Arlington, Virginia. Lisa, a Maryland resident, comes in for a measurement and purchases a $1,500 dress. Lisa returns to Virginia a few weeks later to pick up the dress and drive it back to her Maryland residence, where she will use the dress. Assuming that Virginia's sales tax rate is 5 percent and that Maryland's sales tax rate is 6 percent, what is Roxy's sales tax liability?

Accepted Answer

A)  $0. 
B)  $75 to Virginia. 
C)  $75 sales tax to Virginia and $15 use tax to Maryland. 
D)  $90 to Maryland. 
A)  $0. 
B)  $75 to Virginia. 
C)  $75 sales tax to Virginia and $15 use tax to Maryland. 
D)  $90 to Maryland.

Question 10

Mighty Manny, Incorporated, manufactures and services deli machinery and distributes it across the United States. Mighty Manny is incorporated and headquartered in New Jersey. It has sales tax nexus in Connecticut, New Jersey, New York, Pennsylvania, Rhode Island, and South Carolina. Mighty Manny has sales as follows:
   Assume the following sales tax rates: Connecticut (6.75 percent), New Jersey (7.5 percent), New York (8.5 percent), Pennsylvania (6.5 percent), Rhode Island (7.25 percent), and South Carolina (5.5 percent). Assume that Connecticut also taxes Mighty Manny's services. What is Mighty Manny's total sales and use tax liability?

Accepted Answer

$233,626.
($398,495 × 6.75 per

Question 11

Purchases of inventory for resale are typically exempt from sales and use taxes.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following sales is always subject to sales and use tax in a state that assesses a sales and use tax?

Accepted Answer

A)  Tax preparation services. 
B)  Automobiles. 
C)  Inventory. 
D)  Food. 
A)  Tax preparation services. 
B)  Automobiles. 
C)  Inventory. 
D)  Food.

Question 13

Sales personnel investigating a potential customer's creditworthiness generally are deemed to exceed protected boundaries of solicitation.

Accepted Answer

A) True 
 B)False

Question 14

The primary purpose of state and local taxes is to raise revenue to finance state and local government.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following regarding the state tax base is incorrect?

Accepted Answer

A)  It is computed by making adjustments to federal taxable income. 
B)  It is divided into business and nonbusiness income. 
C)  It is a necessary step in the state income tax process. 
D)  It applies only to interstate businesses. 
A)  It is computed by making adjustments to federal taxable income. 
B)  It is divided into business and nonbusiness income. 
C)  It is a necessary step in the state income tax process. 
D)  It applies only to interstate businesses.

Question 16

Assume Tennis Pro attends a sports equipment expo in Washington state. Assume this activity creates nexus for the Business & Occupation (B&O) tax. Assume the tax is 0.5 percent of gross receipts for retailers and 1.5 percent of gross receipts on services. If Tennis Pro has $20,000 of Washington retail sales and $2,000 of services performed, calculate Tennis Pro's B&O tax.

Accepted Answer

$130.
($20

Question 17

Which of the following businesses is likely to have taxable sales for purposes of sales and use tax?

Accepted Answer

A)  Campus bookstore selling textbooks and university apparel. 
B)  An online retailer of textbooks with less than $100,000 in sales on 150 transactions. 
C)  A local accounting firm. 
D)  Mail-order clothing company. 
A)  Campus bookstore selling textbooks and university apparel. 
B)  An online retailer of textbooks with less than $100,000 in sales on 150 transactions. 
C)  A local accounting firm. 
D)  Mail-order clothing company.

Question 18

A unitary-return group includes only companies included in the federal consolidated tax return filing.

Accepted Answer

A) True 
 B)False

Question 19

In recent years, states are weighting the sales factor because it is easier to calculate.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not a general rule for calculating the property factor?

Accepted Answer

A)  Uses the average property values for the year. 
B)  Values property at historical cost. 
C)  Excludes property in transit from the calculation. 
D)  Includes rented property at eight times the annual rent. 
A)  Uses the average property values for the year. 
B)  Values property at historical cost. 
C)  Excludes property in transit from the calculation. 
D)  Includes rented property at eight times the annual rent.

The Wayfair decision held that an out-of-state mail-order company did not have sales tax collection responsibility because it lacked physical presence.

The property factor is generally calculated as being the average of the beginning and ending property values.

Businesses must collect sales tax only in states where they have sales tax nexus.

Which of the following isn't a requirement of Public Law 86-272?

Which of the following isn't a typical federal/state adjustment?

Purchases of inventory for resale are typically exempt from sales and use taxes.

Which of the following sales is always subject to sales and use tax in a state that assesses a sales and use tax?

Sales personnel investigating a potential customer's creditworthiness generally are deemed to exceed protected boundaries of solicitation.

The primary purpose of state and local taxes is to raise revenue to finance state and local government.

Which of the following regarding the state tax base is incorrect?

Which of the following businesses is likely to have taxable sales for purposes of sales and use tax?

A unitary-return group includes only companies included in the federal consolidated tax return filing.

In recent years, states are weighting the sales factor because it is easier to calculate.

Which of the following is not a general rule for calculating the property factor?

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Exam 12: State and Local Taxes

The Wayfair decision held that an out-of-state mail-order company did not have sales tax collection responsibility because it lacked physical presence.

The property factor is generally calculated as being the average of the beginning and ending property values.

Businesses must collect sales tax only in states where they have sales tax nexus.

Which of the following isn't a requirement of Public Law 86-272?

Which of the following isn't a typical federal/state adjustment?

Purchases of inventory for resale are typically exempt from sales and use taxes.

Which of the following sales is always subject to sales and use tax in a state that assesses a sales and use tax?

Sales personnel investigating a potential customer's creditworthiness generally are deemed to exceed protected boundaries of solicitation.

The primary purpose of state and local taxes is to raise revenue to finance state and local government.

Which of the following regarding the state tax base is incorrect?

Which of the following businesses is likely to have taxable sales for purposes of sales and use tax?

A unitary-return group includes only companies included in the federal consolidated tax return filing.

In recent years, states are weighting the sales factor because it is easier to calculate.

Which of the following is not a general rule for calculating the property factor?

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters