Question 1

Businesses subject to income tax in more than one jurisdiction have the right to apportionment.

Accepted Answer

A) True 
 B)False

Question 2

Federal/state adjustments correct for differences between two states' tax laws.

Accepted Answer

A) True 
 B)False

Question 3

A state's apportionment formula divides nonbusiness income among the states where income tax nexus exists.

Accepted Answer

A) True 
 B)False

Question 4

Lefty provides demolition services in several southern states.Lefty has property as follows:   Lefty is a Mississippi corporation.Lefty also rents property in Mississippi and Tennessee with annual rents of $50,000 and $15,000,respectively.What is Lefty's Mississippi property numerator? (Round your answer to the nearest whole number.)

Accepted Answer

A) $942,153 
B) $1,002,384 
C) $1,052,384 
D) $1,342,153 
A) $942,153 
B) $1,002,384 
C) $1,052,384 
D) $1,342,153

Question 5

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 6

Which of the following isn't a criterion used to determine whether a unitary relationship exists?

Accepted Answer

A) Functional integration. 
B) Centralized management. 
C) Economies of scale. 
D) Consolidated return status. 
A) Functional integration. 
B) Centralized management. 
C) Economies of scale. 
D) Consolidated return status.

Question 7

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.

Question 8

Roxy operates a dress shop in Arlington,Virginia.Lisa,a Maryland resident,comes in for a measurement and purchases a $1,500 dress that is shipped to her Maryland residence using a common carrier.Roxy's total Maryland sales are $20,000 on 15 transactions.Assuming that Virginia's sales tax rate is 5 percent and that Maryland's sales tax rate is 7 percent,what is Roxy's sales and use 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 9

What was the Supreme Court's holding in National Bellas Hess?

Accepted Answer

A) An out-of-state mail-order company did not have a sales tax collection responsibility because it lacked physical presence. 
B) Reaffirmed that an out-of-state business must have physical presence in the state before the state may require the business to collect sales tax from in-state customers. 
C) Spelled out four criteria for determining whether states may subject nondomiciliary companies to an income tax. 
D) Defined solicitation for purposes of Public Law 86-272. 
A) An out-of-state mail-order company did not have a sales tax collection responsibility because it lacked physical presence. 
B) Reaffirmed that an out-of-state business must have physical presence in the state before the state may require the business to collect sales tax from in-state customers. 
C) Spelled out four criteria for determining whether states may subject nondomiciliary companies to an income tax. 
D) Defined solicitation for purposes of Public Law 86-272.

Question 10

Public Law 86-272 protects solicitation from income taxation.Which of the following activities exceeds the solicitation threshold?

Accepted Answer

A) Any form of advertising. 
B) Distribution of samples without charge. 
C) Accepting a down payment. 
D) Checking a customer's inventory. 
A) Any form of advertising. 
B) Distribution of samples without charge. 
C) Accepting a down payment. 
D) Checking a customer's inventory.

Question 11

A state's apportionment formula usually is applied using some variation of sales,payroll,and property factors.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following activities will create sales tax nexus?

Accepted Answer

A) Advertising using television commercials. 
B) Salespeople physically located in a state from which they only take orders. 
C) Delivery of sales by UPS. 
D) $90,000 of sales on 190 online sales transactions. 
A) Advertising using television commercials. 
B) Salespeople physically located in a state from which they only take orders. 
C) Delivery of sales by UPS. 
D) $90,000 of sales on 190 online sales transactions.

Question 13

Tennis Pro is headquartered in Virginia.Assume it has a Kentucky state income tax base of $220,000.Of this amount,$40,000 was nonbusiness income.Assume that Tennis Pro's Kentucky sales,payroll,and property apportionment factor are 12,5,and 3 percent,respectively.Assume that Kentucky uses a single-factor sales formula apportionment method.The nonbusiness income allocated to Kentucky was $1,000.Assuming Kentucky's corporate tax rate is 6 percent,what is Tennis Pro's Kentucky state income tax liability?

Accepted Answer

$1,356.$220,000 (state tax base)− $40,00

Question 14

Which of the following is an income-based tax?

Accepted Answer

A) Ohio Commercial Activity Tax. 
B) Texas Margin Tax. 
C) Washington Business & Occupation Tax. 
D) Wisconsin corporate tax. 
A) Ohio Commercial Activity Tax. 
B) Texas Margin Tax. 
C) Washington Business & Occupation Tax. 
D) Wisconsin corporate tax.

Question 15

Nondomiciliary businesses are subject to tax everywhere they do business.

Accepted Answer

A) True 
 B)False

Question 16

Wyoming imposes an income tax on corporations.

Accepted Answer

A) True 
 B)False

Question 17

Economic presence always creates sales tax nexus.

Accepted Answer

A) True 
 B)False

Question 18

Gordon operates the Tennis Pro Shop in Blacksburg,Virginia.Tennis Pro has property as follows:
   Tennis Pro also rents Virginia property at an annual rent of $24,000.What is Tennis Pro's Virginia property numerator and property factor? (Round interim calculations to the nearest whole number and the property factor to two decimal places.)

Accepted Answer

$1,577,179 and 88.83 percent.The annual

Question 19

Handsome Rob provides transportation services in several western states.Rob has payroll as follows:   Rob is a California corporation and the following is true:
Rob has income tax nexus in Arizona,California,Nevada,and Washington.The Washington drivers spend 25 percent of their time driving through Oregon.California payroll includes $200,000 of payroll for services provided in Nevada by California-based drivers.What is Rob's California payroll numerator?

Accepted Answer

A) $934,589 
B) $1,134,589 
C) $1,215,347 
D) $2,657,275 
A) $934,589 
B) $1,134,589 
C) $1,215,347 
D) $2,657,275

Question 20

Super Sadie,Incorporated,manufactures sandals and distributes them across the southwestern United States.Super Sadie is incorporated and headquartered in Arizona.It has product sales to customers in Arizona,California,Colorado,New Mexico,Oregon,Texas,and Utah.In each state it has sales of less than $100,000 on under 200 transactions.It has sales personnel in California,Colorado,and New Mexico.It also owns an office building in Arizona and a warehouse in Texas.Determine the states in which Super Sadie has sales tax nexus.

Accepted Answer

Arizona,California,Colorado,New Mexico,a

Businesses subject to income tax in more than one jurisdiction have the right to apportionment.

Federal/state adjustments correct for differences between two states' tax laws.

A state's apportionment formula divides nonbusiness income among the states where income tax nexus exists.

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

Which of the following isn't a criterion used to determine whether a unitary relationship exists?

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

What was the Supreme Court's holding in National Bellas Hess?

Public Law 86-272 protects solicitation from income taxation.Which of the following activities exceeds the solicitation threshold?

A state's apportionment formula usually is applied using some variation of sales,payroll,and property factors.

Which of the following activities will create sales tax nexus?

Which of the following is an income-based tax?

Nondomiciliary businesses are subject to tax everywhere they do business.

Wyoming imposes an income tax on corporations.

Economic presence always creates sales tax nexus.

An Introduction to Tax

Tax Compliance,the Irs,and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview,dependents,and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income,deductions,and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

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 Ustaxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Exam 23: State and Local Taxes

Businesses subject to income tax in more than one jurisdiction have the right to apportionment.

Federal/state adjustments correct for differences between two states' tax laws.

A state's apportionment formula divides nonbusiness income among the states where income tax nexus exists.

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

Which of the following isn't a criterion used to determine whether a unitary relationship exists?

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

What was the Supreme Court's holding in National Bellas Hess?

Public Law 86-272 protects solicitation from income taxation.Which of the following activities exceeds the solicitation threshold?

A state's apportionment formula usually is applied using some variation of sales,payroll,and property factors.

Which of the following activities will create sales tax nexus?

Which of the following is an income-based tax?

Nondomiciliary businesses are subject to tax everywhere they do business.

Wyoming imposes an income tax on corporations.

Economic presence always creates sales tax nexus.

An Introduction to Tax

Tax Compliance,the Irs,and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview,dependents,and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income,deductions,and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

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 Ustaxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters