Exam 12: State and Local Taxes

Big Company and Little Company are both owned by Mrs.Smith.Big and Little file a consolidated federal tax return.Big manufactures office paper and other paper supplies and is based in Washington.Little operates a logging operation in Montana.Sixty percent of Little's sales are made to Big.Ten percent of Big's raw materials come from Little.There are no common officers or board members.There are no common service providers.What are the factors for and against filing a unitary tax return?

Gordon operates the Tennis Pro Shop in Blacksburg,Virginia.Tennis Pro has payroll as follows: The other total includes $10,000 of salary of a Virginia employee that works part time in another state.What is Tennis Pro's Virginia payroll numerator and payroll factor?

What was the Supreme Court's holding in National Bellas Hess?

Gordon operates the Tennis Pro Shop in Blacksburg,Virginia.The Shop sells,manufacturers,and customizes tennis racquets for serious amateurs.Virginia has a 5 percent sales tax.Tennessee has a 4 percent sales tax.Determine the sales and use tax liability that the Shop must collect and remit if it sells a $500 racquet to a Tennessee resident that purchases the merchandise in the Virginia retail store?

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

Business income is allocated to the state of commercial domicile.

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

Discuss the steps necessary to determine whether a sales or use tax applies and how the tax is collected.

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

Business income includes all income earned in the ordinary course of business.

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

Wacky Wendy produces gourmet cheese in Wisconsin.Wendy has sales as follows: Wendy is a Wisconsin Corporation and has the following operations. Wendy has nexus in Iowa,Minnesota,and Wisconsin.The Michigan sales are shipped from Wisconsin (a throwback state).$100,000 of the Wisconsin sales were to the federal government.What is Wendy's Wisconsin sale numerator?

Tennis Pro has the following sales,payroll and property factors: What is Tennis Pro's Virginia and Maryland apportionment factors if both states use an equally-weighted three-factor formula?

The Wrigley case held that the sale of intangibles is protected by Public Law 86-272.

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,Wisconsin,and Wyoming.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:

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 Illinois state tax base.

Assume Tennis Pro attends a sports equipment expo in Washington State.Assume this activity creates nexus of the Business and Occupation (B&O)tax.Assume the tax is 0.5% of gross receipts for retailers and 1.5% of gross receipts on services.If Tennis Pro has $20,000 of Washington retail sales and $2,000 of services performed,calculate Tennis Pro's B&O tax.

Gordon operates the Tennis Pro Shop in Blacksburg,Virginia.Tennis Pro has property as follows: What is Tennis Pro's Virginia property numerator and property factor?

Which of the following isn't a typical federal/state adjustment?

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