Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Most state tax laws adopt the federal tax law as of a specific date in time.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A)  Tangible personal property sales are sourced to the destination state. 
B)  If the business does not have income tax nexus in the destination state, the sales are thrown back to the state where the goods were shipped from. 
C)  Services are sourced to the destination state. 
D)  Government sales are sourced to the state where they were shipped from. 
A)  Tangible personal property sales are sourced to the destination state. 
B)  If the business does not have income tax nexus in the destination state, the sales are thrown back to the state where the goods were shipped from. 
C)  Services are sourced to the destination state. 
D)  Government sales are sourced to the state where they were shipped from.

Question 4

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 5

The trade show rule allows businesses to maintain a sample room for up to four weeks per year.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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 collection obligation?

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 8

Wacky Wendy produces gourmet cheese in Wisconsin. Wendy has sales as follows:   Wendy is a Wisconsin corporation and has the following operations:
Wendy has income tax nexus in Iowa, Minnesota, and Wisconsin. The Michigan sales are shipped from Wisconsin (a throwback state). $100,000 of the Wisconsin sales were to the federal government. What is Wendy's Wisconsin sale numerator?

Accepted Answer

A)  $1,223,032 
B)  $1,323,032 
C)  $1,357,621 
D)  $1,457,621 
A)  $1,223,032 
B)  $1,323,032 
C)  $1,357,621 
D)  $1,457,621

Question 9

Roxy operates a dress shop in Arlington, Virginia. Lisa, a Maryland resident, comes in for a measurement and purchases a $3,100 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 collection obligation?

Accepted Answer

A)  $0 
B)  $155 to Virginia 
C)  $155 sales tax to Virginia and $31 use tax to Maryland 
D)  $186 to Maryland 
A)  $0 
B)  $155 to Virginia 
C)  $155 sales tax to Virginia and $31 use tax to Maryland 
D)  $186 to Maryland

Question 10

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 0.5percent of gross receipts for retailers and 1.5percent 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 11

Tennis Pro is headquartered in Virginia. Assume it has a state income tax base of $200,000. Of this amount, $60,000 was nonbusiness income. Assume that Tennis Pro's Virginia apportionment factor is 73.28 percent. The nonbusiness income allocated to Virginia was $23,000. Assuming a Virginia corporate tax rate of 5.5 percent, what is Tennis Pro's Virginia stateincome tax liability? (Round your answer to the nearest whole number.)

Accepted Answer

$6,908.
$200,000 (state tax base) − $60,

Question 12

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis Pro has sales as follows:
   Assume that Tennis Pro's other sales include $150,400 of sales to a federal government entity that were shipped from Virginia to Maryland. What is Tennis Pro's Virginia sales numerator and sales factor? (Round the sales factor to two decimal places.)

Accepted Answer

${{[a(7)]:#,###}} and {{[a(8)]

Question 13

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 14

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.$26

Question 15

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 stateincome tax liability?

Accepted Answer

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

Question 16

Nondomiciliary businesses are subject to tax everywhere they do business.

Accepted Answer

A) True 
 B)False

Question 17

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 Mexic

Question 18

Use tax liability accrues in the state where taxable purchased property will be used when the seller of the property is not required to collect sales tax.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not a general rule for allocating nonbusiness income?

Accepted Answer

A)  Interest and dividends to the state of commercial domicile. 
B)  Rental income for investment property to state of commercial domicile. 
C)  Rental income for business property to state where property is located. 
D)  Capital gains from rental property to state where property is located. 
A)  Interest and dividends to the state of commercial domicile. 
B)  Rental income for investment property to state of commercial domicile. 
C)  Rental income for business property to state where property is located. 
D)  Capital gains from rental property to state where property is located.

Question 20

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 hasincome tax nexus in Arizona, California, Nevada, and Washington. The Washington drivers spend 25 percent of their time driving through Oregon. California payroll includes $201,800 of payroll for services provided in Nevada by California-based drivers. What is Rob's California payroll numerator?

Accepted Answer

A)  $932,951. 
B)  $1,134,751. 
C)  $1,215,401. 
D)  $2,657,959. 
A)  $932,951. 
B)  $1,134,751. 
C)  $1,215,401. 
D)  $2,657,959.

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

Most state tax laws adopt the federal tax law as of a specific date in time.

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

The trade show rule allows businesses to maintain a sample room for up to four weeks per year.

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

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

Nondomiciliary businesses are subject to tax everywhere they do business.

Use tax liability accrues in the state where taxable purchased property will be used when the seller of the property is not required to collect sales tax.

Which of the following is not a general rule for allocating nonbusiness income?

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Business Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Non-Liquidating 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

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

Most state tax laws adopt the federal tax law as of a specific date in time.

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

The trade show rule allows businesses to maintain a sample room for up to four weeks per year.

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

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

Nondomiciliary businesses are subject to tax everywhere they do business.

Use tax liability accrues in the state where taxable purchased property will be used when the seller of the property is not required to collect sales tax.

Which of the following is not a general rule for allocating nonbusiness income?

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Business Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Non-Liquidating 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