Question 1

Which of the following is an income based tax?

Accepted Answer

A)  Ohio Commercial Activity Tax. 
B)  Texas Margin Tax. 
C)  Washington Business & Occupation Tax. 
D)  Wisconsin Corporate Tax. 
A)  Ohio Commercial Activity Tax. 
B)  Texas Margin Tax. 
C)  Washington Business & Occupation Tax. 
D)  Wisconsin Corporate Tax.

Question 2

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 3

The primary purpose of state and local taxes is to raise revenue to finance state and local government.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Which of the following isn't a requirement of Public Law 86-272?

Accepted Answer

A)  The tax is based on net income. 
B)  The taxpayer sells only tangible personal property. 
C)  The taxpayer is an intrastate business. 
D)  The taxpayer is nondomiciliary. 
A)  The tax is based on net income. 
B)  The taxpayer sells only tangible personal property. 
C)  The taxpayer is an intrastate business. 
D)  The taxpayer is nondomiciliary.

Question 6

In Complete Auto Transit the court determined eight criteria for determining whether a state can tax a nondomiciliary company.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Handsome Rob provides transportation services in several western states.Rob has sales as follows:   Rob is a California Corporation and has the following facts.
Rob has nexus in Arizona,California,Nevada,and Washington.The Washington drivers spend 25 percent of their time driving through Oregon.California payroll includes $200,000 of payroll for services provided in Nevada by California based drivers.What is Rob's California sale numerator?

Accepted Answer

A)  $934,589. 
B)  $1,134,589. 
C)  $1,215,347. 
D)  $2,657,275. 
A)  $934,589. 
B)  $1,134,589. 
C)  $1,215,347. 
D)  $2,657,275.

Question 9

Purchases of inventory for resale are typically exempt from sales and use taxes.

Accepted Answer

A) True 
 B)False

Question 10

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)− $60,0

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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. 
C)  A local accounting firm. 
D)  Mail order clothing company. 
A)  Campus bookstore selling textbooks and university apparel. 
B)  An online retailer of textbooks. 
C)  A local accounting firm. 
D)  Mail order clothing company.

Question 13

The Quill decision reaffirmed that out-of-state businesses must have physical presence within a state before the state may require the collection of sales taxes from in-state customers.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements regarding income tax commercial domicile is incorrect?

Accepted Answer

A)  The location where a business is headquartered. 
B)  The location where a business is incorporated. 
C)  The location from which a business directs its operations. 
D)  None of the choices are correct. 
A)  The location where a business is headquartered. 
B)  The location where a business is incorporated. 
C)  The location from which a business directs its operations. 
D)  None of the choices are correct.

Question 15

A state's apportionment formula divides nonbusiness income among the states where nexus exists.

Accepted Answer

A) True 
 B)False

Question 16

Mighty Manny,Incorporated manufactures ice scrapers and distributes them across the Midwestern United States.Mighty Manny is incorporated and headquartered in Michigan.It has product sales to customers in Illinois,Indiana,Iowa,Michigan,Minnesota,and Wisconsin.It has sales personnel only where discussed.Determine the state in which Mighty Manny does not have sales and use tax nexus given the following scenarios:

Accepted Answer

A)  Mighty Manny is incorporated and headquartered in Michigan. It also has property, employees, sales personnel, and intangibles in Michigan. 
B)  Mighty Manny has a warehouse in Illinois. 
C)  Mighty Manny has independent sales representatives in Minnesota. The representatives distribute ice scraper-related items for over a dozen companies. 
D)  Mighty Manny has two customers in Wisconsin. Mighty Manny receives orders over the phone and ships goods to its customers using FedEx. 
A)  Mighty Manny is incorporated and headquartered in Michigan. It also has property, employees, sales personnel, and intangibles in Michigan. 
B)  Mighty Manny has a warehouse in Illinois. 
C)  Mighty Manny has independent sales representatives in Minnesota. The representatives distribute ice scraper-related items for over a dozen companies. 
D)  Mighty Manny has two customers in Wisconsin. Mighty Manny receives orders over the phone and ships goods to its customers using FedEx.

Question 17

Which of the following activities will create sales tax nexus?

Accepted Answer

A)  Advertising using television commercials. 
B)  Sales people physically located in a state from which they only take orders. 
C)  Delivery of sales by UPS. 
D)  Electronic delivery of software. 
A)  Advertising using television commercials. 
B)  Sales people physically located in a state from which they only take orders. 
C)  Delivery of sales by UPS. 
D)  Electronic delivery of software.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not one of the Complete Auto Transit's criteria for whether a state can tax nondomiciliary companies?

Accepted Answer

A)  Protected activities are exempt. 
B)  A sufficient connection exists. 
C)  Only a fair portion of income can be taxed. 
D)  Tax cannot discriminate against nondomiciliary businesses. 
A)  Protected activities are exempt. 
B)  A sufficient connection exists. 
C)  Only a fair portion of income can be taxed. 
D)  Tax cannot discriminate against nondomiciliary businesses.

Question 20

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

Accepted Answer

A) True 
 B)False

Which of the following is an income based tax?

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

The primary purpose of state and local taxes is to raise revenue to finance state and local government.

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

Which of the following isn't a requirement of Public Law 86-272?

In Complete Auto Transit the court determined eight criteria for determining whether a state can tax a nondomiciliary company.

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

Purchases of inventory for resale are typically exempt from sales and use taxes.

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

Which of the following businesses is likely to have taxable sales for purposes of sales and use tax?

The Quill decision reaffirmed that out-of-state businesses must have physical presence within a state before the state may require the collection of sales taxes from in-state customers.

Which of the following statements regarding income tax commercial domicile is incorrect?

A state's apportionment formula divides nonbusiness income among the states where nexus exists.

Which of the following activities will create sales tax nexus?

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

Which of the following is not one of the Complete Auto Transit's criteria for whether a state can tax nondomiciliary companies?

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

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, Neorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

The Ustaxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Exam 12: State and Local Taxes

Which of the following is an income based tax?

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

The primary purpose of state and local taxes is to raise revenue to finance state and local government.

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

Which of the following isn't a requirement of Public Law 86-272?

In Complete Auto Transit the court determined eight criteria for determining whether a state can tax a nondomiciliary company.

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

Purchases of inventory for resale are typically exempt from sales and use taxes.

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

Which of the following businesses is likely to have taxable sales for purposes of sales and use tax?

The Quill decision reaffirmed that out-of-state businesses must have physical presence within a state before the state may require the collection of sales taxes from in-state customers.

Which of the following statements regarding income tax commercial domicile is incorrect?

A state's apportionment formula divides nonbusiness income among the states where nexus exists.

Which of the following activities will create sales tax nexus?

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

Which of the following is not one of the Complete Auto Transit's criteria for whether a state can tax nondomiciliary companies?

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

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, Neorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

The Ustaxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters