Question 1

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. A

Question 2

Carolina's Hats has the following sales, payroll, and property factors:   What is Carolina's Hats North and South Carolina apportionment factors if North Carolina uses an equally weighted three-factor formula and South Carolina uses a double-weighted sales factor formula? (Round your answers to two decimal places.)

Accepted Answer

A)  North Carolina 74.03 percent, and South Carolina 19.45 percent. 
B)  North Carolina 74.03 percent, and South Carolina 20.22 percent. 
C)  North Carolina 74.28 percent, and South Carolina 19.45 percent. 
D)  North Carolina 74.28 percent, and South Carolina 22.51 percent. 
A)  North Carolina 74.03 percent, and South Carolina 19.45 percent. 
B)  North Carolina 74.03 percent, and South Carolina 20.22 percent. 
C)  North Carolina 74.28 percent, and South Carolina 19.45 percent. 
D)  North Carolina 74.28 percent, and South Carolina 22.51 percent. B

Question 3

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

Accepted Answer

A) True 
 B)False  True

Question 4

Della Corporation is headquartered in Carlisle, Pennsylvania. Della has a Pennsylvania state income tax base of $431,000. Of this amount, $76,200 was nonbusiness income. Della's Pennsylvania apportionment factor is 28.52 percent. The nonbusiness income allocated to Pennsylvania was $61,600. 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)  $8,941 
B)  $9,204 
C)  $12,616 
D)  $13,701 
A)  $8,941 
B)  $9,204 
C)  $12,616 
D)  $13,701

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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 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 7

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 8

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 9

What was the Supreme Court's holding in Complete Auto Transit?

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)  Provided 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)  Provided 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

Which of the following sales is likely 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 11

Tennis Pro, a Virginia corporation domiciled in Virginia, has the following items of income: $5,000 of dividend income, $15,000 of interest income, $10,000 of rental income from Georgia property,and $30,000 of royalty income for an intangible used in Maryland (where income tax nexus exists). Determine how much income is allocated to Virginia.

Accepted Answer

$20,000. $5,000 of d

Question 12

Economic presence always creates sales tax nexus.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is an income-based tax?

Accepted Answer

A)  Ohio Commercial Activity Tax 
B)  Nevada Commerce Tax 
C)  Washington Business & Occupation Tax 
D)  Wisconsin corporate tax
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
103) Discuss the steps necessary to determine whether a business has a sales tax collection obligation within a state and how the tax is collected. 
A)  Ohio Commercial Activity Tax 
B)  Nevada Commerce Tax 
C)  Washington Business & Occupation Tax 
D)  Wisconsin corporate tax
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
103) Discuss the steps necessary to determine whether a business has a sales tax collection obligation within a state and how the tax is collected.

Question 14

Public Law 86-272 protects a taxpayer from which of the following taxes?

Accepted Answer

A)  Texas Margin Tax (a tax with net income, gross receipts, and capital worth components). 
B)  Washington Business & Occupation Tax (a gross receipts tax). 
C)  Ohio Commercial Activity Tax (an excise tax with a gross receipts base). 
D)  California Franchise Tax (a net income tax). 
A)  Texas Margin Tax (a tax with net income, gross receipts, and capital worth components). 
B)  Washington Business & Occupation Tax (a gross receipts tax). 
C)  Ohio Commercial Activity Tax (an excise tax with a gross receipts base). 
D)  California Franchise Tax (a net income tax).

Question 15

Hoosier Incorporated is an Indiana corporation. It properly included, deducted, or excluded the following items on its federal tax return in the current year:   State depreciation expense was $50,000. Hoosier's federal taxable income was $150,300. Calculate Hoosier's Indiana state tax base.

Accepted Answer

A)  $171,300 
B)  $173,800 
C)  $199,633 
D)  $207,133 
A)  $171,300 
B)  $173,800 
C)  $199,633 
D)  $207,133

Question 16

Super Sadie, Incorporated, manufactures sandals and distributes them across the southwestern United States. Assume that Super Sadie has sales tax nexus in Arizona, California, Colorado, New Mexico, and Texas. Super Sadie has sales as follows:
   Assume the following sales tax rates: Arizona (6 percent), California (8 percent), Colorado (7 percent), New Mexico (6.5 percent), Pennsylvania (7.25 percent), Texas (8 percent), and Utah (5 percent). What is Super Sadie's total sales and use tax liability? (Round your interim calculations to the nearest whole number.)

Accepted Answer

$233,900.
($583,194 × 6 percen

Question 17

Rental income is allocated to the state of commercial domicile.

Accepted Answer

A) True 
 B)False

Question 18

Wacky Wendy produces gourmet cheese in Wisconsin. Wendy has sales as follows:   Wendy is a Wisconsin corporation and has the following operations:
Wendy hasincome tax nexus in Iowa, Minnesota, and Wisconsin. The Michigan sales are shipped from Wisconsin (a throwback state). $101,500 of the Wisconsin sales were to the federal government. What is Wendy's Wisconsin sale numerator?

Accepted Answer

A)  $1,221,802. 
B)  $1,323,302. 
C)  $1,356,526. 
D)  $1,458,026. 
A)  $1,221,802. 
B)  $1,323,302. 
C)  $1,356,526. 
D)  $1,458,026.

Question 19

Most states have shifted away from an equally weighted three-factor to a heavily weighted sales apportionment formula.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

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.

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

What was the Supreme Court's holding in Complete Auto Transit?

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

Economic presence always creates sales tax nexus.

Which of the following is an income-based tax?

Public Law 86-272 protects a taxpayer from which of the following taxes?

Hoosier Incorporated is an Indiana corporation. It properly included, deducted, or excluded the following items on its federal tax return in the current year: State depreciation expense was $50,000. Hoosier's federal taxable income was $150,300. Calculate Hoosier's Indiana state tax base.

Rental income is allocated to the state of commercial domicile.

Most states have shifted away from an equally weighted three-factor to a heavily weighted sales apportionment formula.

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

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

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.

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

What was the Supreme Court's holding in Complete Auto Transit?

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

Economic presence always creates sales tax nexus.

Which of the following is an income-based tax?

Public Law 86-272 protects a taxpayer from which of the following taxes?

Hoosier Incorporated is an Indiana corporation. It properly included, deducted, or excluded the following items on its federal tax return in the current year: State depreciation expense was $50,000. Hoosier's federal taxable income was $150,300. Calculate Hoosier's Indiana state tax base.

Rental income is allocated to the state of commercial domicile.

Most states have shifted away from an equally weighted three-factor to a heavily weighted sales apportionment formula.

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

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