Question 1

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 2

In which of the following state cases did the state not assert economic nexus?

Accepted Answer

A)  New York with the Amazon rule. 
B)  South Carolina in the Geoffrey case. 
C)  West Virginia in the MBNA case. 
D)  Wisconsin in Wrigley. 
A)  New York with the Amazon rule. 
B)  South Carolina in the Geoffrey case. 
C)  West Virginia in the MBNA case. 
D)  Wisconsin in Wrigley.

Question 3

What was the Supreme Court's holding in Quill?

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 4

Several states are now moving from a strict physical presence test towards an economic presence test.

Accepted Answer

A) True 
 B)False

Question 5

Businesses engaged in interstate commerce are subject to income tax in every state in which they operate.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

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

Question 7

Public Law 86-272 protects only companies selling tangible personal property.

Accepted Answer

A) True 
 B)False

Question 8

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 9

On which of the following transactions should sales tax generally be collected?

Accepted Answer

A)  Architecture plans delivered through the mail. 
B)  Sales of woolen goods to a state without sales tax nexus delivered through common carrier. 
C)  Accounting services provided in Alaska. 
D)  Meal purchased at McDonald's. 
A)  Architecture plans delivered through the mail. 
B)  Sales of woolen goods to a state without sales tax nexus delivered through common carrier. 
C)  Accounting services provided in Alaska. 
D)  Meal purchased at McDonald's.

Question 10

Interest and dividends are allocated to the state of commercial domicile.

Accepted Answer

A) True 
 B)False

Question 11

Mahre, Incorporated, a New York corporation, runs ski tours in a several states. Mahre also has a New York retail store and an Internet store which ships to out-of-state customers. The ski tours operate in Maine, New Hampshire, and Vermont where Mahre has employees and owns and uses tangible personal property. Mahre has real property only in New York. Mahre has the following sales:  
Assume the following sales tax rates: Alaska (0 percent), Colorado (7.75 percent), Maine (8.5 percent), New Hampshire (6.75 percent), New York (8 percent), and Vermont (5 percent). How much sales and use tax must Mahre collect and remit in Maine?

Accepted Answer

A)  $0 
B)  $3,053 
C)  $13,267 
D)  $16,319 
A)  $0 
B)  $3,053 
C)  $13,267 
D)  $16,319

Question 12

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 13

Giving samples and promotional materials without charge is a protected solicitation activity.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following isn't a criteria 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 15

Which of the following is not a primary revenue source for most states?

Accepted Answer

A)  Income or franchise taxes 
B)  Sales or use taxes 
C)  Severance taxes 
D)  Property taxes 
A)  Income or franchise taxes 
B)  Sales or use taxes 
C)  Severance taxes 
D)  Property taxes

Question 16

Many states are either starting to or are in the process of expanding the types of services subject to sales tax.

Accepted Answer

A) True 
 B)False

Question 17

Delivery of tangible personal property through common carrier is a protected activity.

Accepted Answer

A) True 
 B)False

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

In which of the following state cases did the state not assert economic nexus?

What was the Supreme Court's holding in Quill?

Several states are now moving from a strict physical presence test towards an economic presence test.

Businesses engaged in interstate commerce are subject to income tax in every state in which they operate.

Public Law 86-272 protects only companies selling tangible personal property.

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

On which of the following transactions should sales tax generally be collected?

Interest and dividends are allocated to the state of commercial domicile.

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

Giving samples and promotional materials without charge is a protected solicitation activity.

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

Which of the following is not a primary revenue source for most states?

Many states are either starting to or are in the process of expanding the types of services subject to sales tax.

Delivery of tangible personal property through common carrier is a protected activity.

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 U.S. Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Exam 12: State and Local Taxes

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

In which of the following state cases did the state not assert economic nexus?

What was the Supreme Court's holding in Quill?

Several states are now moving from a strict physical presence test towards an economic presence test.

Businesses engaged in interstate commerce are subject to income tax in every state in which they operate.

Public Law 86-272 protects only companies selling tangible personal property.

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

On which of the following transactions should sales tax generally be collected?

Interest and dividends are allocated to the state of commercial domicile.

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

Giving samples and promotional materials without charge is a protected solicitation activity.

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

Which of the following is not a primary revenue source for most states?

Many states are either starting to or are in the process of expanding the types of services subject to sales tax.

Delivery of tangible personal property through common carrier is a protected activity.

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 U.S. Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters