Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

What was the Supreme Court's holding in Wayfair?

Accepted Answer

A)  An out-of-state mail-order company did not have a sales tax collection responsibility because it lacked physical presence. 
B)  Reversed the Quill decision 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)  Reversed the Quill decision 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 toward an economic presence test for income taxes.

Accepted Answer

A) True 
 B)False

Question 5

PWD Incorporated is an Illinois corporation. It properly included, deducted, or excluded the following items on its federal tax return in the current year:   PWD's federal taxable income was $100,000. If Illinois only requires Illinois taxes to be added back, calculate PWD's Illinois state tax base.

Accepted Answer

A)  $116,000 
B)  $130,833 
C)  $131,000 
D)  $145,833 
A)  $116,000 
B)  $130,833 
C)  $131,000 
D)  $145,833

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

PWD Incorporated is an Illinois corporation. It properly included, deducted, or excluded the following items on its federal tax return in the current year:   PWD's federal taxable income was $119,000. If Illinois only requires Illinois taxes to be added back, calculate PWD's Illinois state tax base.

Accepted Answer

A)  $134,943 
B)  $149,447 
C)  $150,418 
D)  $165,479 
A)  $134,943 
B)  $149,447 
C)  $150,418 
D)  $165,479

Question 8

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. Assume sales transactions in all states, except New York, are under 200 and that all states have adopted Wayfair legislation. 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 (0 percent), New York (8 percent), and Vermont (5 percent). How much sales and use tax must Mahre collect and remit?

Accepted Answer

A)  $10,400 
B)  $14,470 
C)  $26,749 
D)  $61,305 
A)  $10,400 
B)  $14,470 
C)  $26,749 
D)  $61,305

Question 9

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 10

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis Pro decides to expand into Pennsylvania during the current year and try some new sales techniques. Tennis Pro advertises on local radio and television as well asin national tennis magazines sent into Pennsylvania. Salespeople give away promotional materials and occasionally sell demonstration models to local shop employees to build goodwill for Tennis Pro. Tennis Pro holds sales meetings at rented space in local hotels. Personnel occasionally fix minor problems such as tape and strings without charge. One employee performed a credit check for a major account that needed merchandise immediately. Each salesperson is allowed an allowance for a car and office equipment to be maintained in an in-home office. Do any of Tennis Pro's activities have the potential to create income tax nexus?

Accepted Answer

The sale of demonstration models, the re

Question 11

State tax law is comprised solely of legislative authority.

Accepted Answer

A) True 
 B)False

Question 12

List the steps necessary to determine an interstate business's state income tax liability.

Accepted Answer

Determine the state tax base, divide int

Question 13

Businesses must pay income tax in their state of commercial domicile.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

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

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Public Law 86-272 protects certain business activities from creating income tax nexus.

Accepted Answer

A) True 
 B)False

Question 17

All 50 states impose a sales and use tax system.

Accepted Answer

A) True 
 B)False

Question 18

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 19

In Complete Auto Transit the U.S. Supreme Court determined eight criteria for determining whether a state can tax a nondomiciliary company.

Accepted Answer

A) True 
 B)False

Question 20

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

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

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

What was the Supreme Court's holding in Wayfair?

Several states are now moving from a strict physical presence test toward an economic presence test for income taxes.

PWD Incorporated is an Illinois corporation. It properly included, deducted, or excluded the following items on its federal tax return in the current year: PWD's federal taxable income was $100,000. If Illinois only requires Illinois taxes to be added back, calculate PWD's Illinois state tax base.

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

PWD Incorporated is an Illinois corporation. It properly included, deducted, or excluded the following items on its federal tax return in the current year: PWD's federal taxable income was $119,000. If Illinois only requires Illinois taxes to be added back, calculate PWD's Illinois state tax base.

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.

State tax law is comprised solely of legislative authority.

List the steps necessary to determine an interstate business's state income tax liability.

Businesses must pay income tax in their state of commercial domicile.

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

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

Public Law 86-272 protects certain business activities from creating income tax nexus.

All 50 states impose a sales and use tax system.

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

In Complete Auto Transit the U.S. Supreme Court determined eight criteria for determining whether a state can tax a nondomiciliary company.

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

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

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

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

What was the Supreme Court's holding in Wayfair?

Several states are now moving from a strict physical presence test toward an economic presence test for income taxes.

PWD Incorporated is an Illinois corporation. It properly included, deducted, or excluded the following items on its federal tax return in the current year: PWD's federal taxable income was $100,000. If Illinois only requires Illinois taxes to be added back, calculate PWD's Illinois state tax base.

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

PWD Incorporated is an Illinois corporation. It properly included, deducted, or excluded the following items on its federal tax return in the current year: PWD's federal taxable income was $119,000. If Illinois only requires Illinois taxes to be added back, calculate PWD's Illinois state tax base.

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.

State tax law is comprised solely of legislative authority.

List the steps necessary to determine an interstate business's state income tax liability.

Businesses must pay income tax in their state of commercial domicile.

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

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

Public Law 86-272 protects certain business activities from creating income tax nexus.

All 50 states impose a sales and use tax system.

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

In Complete Auto Transit the U.S. Supreme Court determined eight criteria for determining whether a state can tax a nondomiciliary company.

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

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