Question 1

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 2

Bethesda Corporation is unprotected from income tax by Public Law 86-272. Which of the following characteristics likely creates a problem for Bethesda in states other than Maryland?

Accepted Answer

A)  Bethesda does business in Maryland and five other states. 
B)  Bethesda sells copier equipment and copy center services. 
C)  All orders are approved in Maryland. 
D)  All in-state services are limited to solicitation in states other than Maryland. 
A)  Bethesda does business in Maryland and five other states. 
B)  Bethesda sells copier equipment and copy center services. 
C)  All orders are approved in Maryland. 
D)  All in-state services are limited to solicitation in states other than Maryland.

Question 3

Most services are sourced to the state where the services were performed.

Accepted Answer

A) True 
 B)False

Question 4

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)  $10,386 
B)  $14,543 
C)  $26,733 
D)  $61,289 
A)  $10,386 
B)  $14,543 
C)  $26,733 
D)  $61,289

Question 5

Public Law 86-272 was a congressional response to Northwestern States Portland Cement.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A)  South Dakota with the Wayfair rule. 
B)  South Carolina in the Geoffrey case. 
C)  West Virginia in the MBNA case. 
D)  Wisconsin in Wrigley. 
A)  South Dakota with the Wayfair rule. 
B)  South Carolina in the Geoffrey case. 
C)  West Virginia in the MBNA case. 
D)  Wisconsin in Wrigley.

Question 7

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. The shop sells, manufactures, and customizes tennis racquets for serious amateurs. Virginia has a 5 percent sales tax. Arizona has a 6 percent sales tax, but Arizona sales thresholds don't exceed the Wayfair limits. Determine the sales tax liability that the shop must collect and remit if it sells a $1,000 racquet order to an Arizona customer (assume the shop has no sales personnel or property in Arizona) that purchases the merchandise from the Virginia store over the internet?

Accepted Answer

$0. The shop has no physical p

Question 8

Wyoming imposes an income tax on corporations.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Roxy operates a dress shop in Arlington, Virginia. Roxy also ships dresses nationwide upon request. Roxy's Virginia sales are $1,900,000 and out-of-state sales are $218,000. Assuming that Virginia's sales tax rate is 5 percent, what is Roxy's Virginia sales and use tax collection obligation?

Accepted Answer

A)  $0 
B)  $10,900 
C)  $95,000 
D)  $105,900 
A)  $0 
B)  $10,900 
C)  $95,000 
D)  $105,900

Question 11

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 12

Immaterial violations of the solicitation rules automatically create income tax nexus.

Accepted Answer

A) True 
 B)False

Question 13

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 14

The state tax base is computed by making adjustments to federal taxable income.

Accepted Answer

A) True 
 B)False

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

Bethesda Corporation is unprotected from income tax by Public Law 86-272. Which of the following characteristics likely creates a problem for Bethesda in states other than Maryland?

Most services are sourced to the state where the services were performed.

Public Law 86-272 was a congressional response to Northwestern States Portland Cement.

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

Wyoming imposes an income tax on corporations.

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

Roxy operates a dress shop in Arlington, Virginia. Roxy also ships dresses nationwide upon request. Roxy's Virginia sales are $1,900,000 and out-of-state sales are $218,000. Assuming that Virginia's sales tax rate is 5 percent, what is Roxy's Virginia sales and use tax collection obligation?

Which of the following activities will create sales tax nexus?

Immaterial violations of the solicitation rules automatically create income tax nexus.

The state tax base is computed by making adjustments to federal taxable 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

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

Bethesda Corporation is unprotected from income tax by Public Law 86-272. Which of the following characteristics likely creates a problem for Bethesda in states other than Maryland?

Most services are sourced to the state where the services were performed.

Public Law 86-272 was a congressional response to Northwestern States Portland Cement.

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

Wyoming imposes an income tax on corporations.

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

Roxy operates a dress shop in Arlington, Virginia. Roxy also ships dresses nationwide upon request. Roxy's Virginia sales are $1,900,000 and out-of-state sales are $218,000. Assuming that Virginia's sales tax rate is 5 percent, what is Roxy's Virginia sales and use tax collection obligation?

Which of the following activities will create sales tax nexus?

Immaterial violations of the solicitation rules automatically create income tax nexus.

The state tax base is computed by making adjustments to federal taxable 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