Question 1

Which of the following is not a primary revenue source for most states?

Accepted Answer

A)  Income or franchise taxes 
B)  Sales or use taxes 
C)  Severance taxes 
D)  Property taxes 
A)  Income or franchise taxes 
B)  Sales or use taxes 
C)  Severance taxes 
D)  Property taxes

Question 2

Which of the following regarding the state tax base is incorrect?

Accepted Answer

A)  It is computed by making adjustments to federal taxable income. 
B)  It is divided into business and nonbusiness income. 
C)  It is a necessary step in the state income tax process. 
D)  It applies only to interstate businesses. 
A)  It is computed by making adjustments to federal taxable income. 
B)  It is divided into business and nonbusiness income. 
C)  It is a necessary step in the state income tax process. 
D)  It applies only to interstate businesses.

Question 3

Lefty provides demolition services in several southern states. Lefty has property as follows: $$\begin{array} { l r r r } 
& { \text { Property } } \
\text { State } &  { \text { Beginning } } & { \text { Ending } } \
\hline
\text { Alabama } & \$ 123,032 & \$ 204,235 \
\text { Kentucky } & \$ 203,311 & \$ 185,102 \
\text { Mississippi } & \$ 881,921 & \$ 1,002,384 \
\text { Louisiana } & \$ 243,945 & \$ 350,304 \
\text { Tennessee } & \underline{\$ 143,198} & \underline{\$ 143,198} \
\text { Total } & \$ 1,595,407 & \$ 1,885,223
\end{array}$$ Lefty is a Mississippi Corporation. Lefty also rents property in Mississippi and Tennessee with annual rents of $50,000 and $15,000, respectively. What is Lefty's Mississippi property numerator?

Accepted Answer

A)  $942,153 
B)  $1,002,384 
C)  $1,052,384 
D)  $1,342,153 
A)  $942,153 
B)  $1,002,384 
C)  $1,052,384 
D)  $1,342,153

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. 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: $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Mahre Sales }$
$\begin{array}{lrrr}
\text { State } & \text { Goods } & {\text { Services }} & {\text { Total }} \
\hline
\text { Alaska } & \$ 23,194 & \$ 0 & \$ 23,194 \
\text { Colorado } & 10,612 & 0 & 10,612 \
\text { Maine } & 35,913 & 156,084 & 191,997 \
\text { New Hampshire } & 26,721 & 325,327 & 352,048 \
\text { New York } & 65,431 & 0 & 65,431 \
\text { Vermont } & \underline{41,982} & \underline{277,441} & \underline{319,423} \
\text { Totals } & \$ 203,853 & \$ 758,852 & \$ 962,705
\end{array}$ Assume the following tax rates: Alaska (6.6 percent), Colorado (7.75 percent), Maine (8.5 percent), New Hampshire (6.75 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

Commercial domicile is the location where a business is headquartered and directs its operations from.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following law types is not a primary source type?

Accepted Answer

A)  Legislative 
B)  Administrative 
C)  Judicial 
D)  Treatises 
A)  Legislative 
B)  Administrative 
C)  Judicial 
D)  Treatises

Question 7

Which of the following isn't a criteria 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.

Question 8

Mighty Manny, Incorporated manufactures and services deli machinery and distributes them across the United States. Mighty Manny is incorporated and headquartered in New Jersey. It has product sales in all 50 states. Mighty Manny 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 and use tax nexus.

Accepted Answer

Connecticut, New Jer

Question 9

Handsome Rob provides transportation services in several western states. Rob has sales as follows: $$\begin{array}{l}
\text { Rob's Payroll: }\
\begin{array} { l r } 
\text { State } & \text { Sales } \
\hline
\text { Arizona } & \$ 350,512 \
\text { California } & \$ 1,134,589 \
\text { Nevada } & \$ 849,142 \
\text { Washington } & \underline{\$ 323,032} \
\text { Totals } & \$ 2,657,275
\end{array}
\end{array}$$ 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 10

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

Accepted Answer

A) True 
 B)False

Question 11

All 50 states impose a sales and use tax system.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

Determine the state tax base, divide int

Question 13

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis Pro sells, manufacturers, and customizes tennis racquets for serious amateurs. Tennis Pro's business has expanded significantly over the last few years. Currently, it has sales personnel in 10 states (Virginia, North Carolina, South Carolina, Georgia, Tennessee, Kentucky, Ohio, Maryland, District of Columbia, New Jersey). All in state activity is limited to solicitation. Orders are taken by the sales team and forwarded to Blacksburg for approval. All orders are sent by common carrier to customers. Tennis Pro owns retail and warehouse space in Virginia and has another warehouse in Kentucky. Where does Tennis Pro have income tax nexus?

Accepted Answer

Virginia a

Question 14

Which of the following sales is always subject to 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 15

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis Pro has property as follows: $$\begin{array}{l}
\text { Tennis Pro's Property: }\
\begin{array} { l r r r } 
\text { State } & \text { Beginning } & & \text { Ending } \
\hline
\text { DC } & \$ 43,021 & & \$ 41,983 \
\text { Georgia } & \$ 92,385 & & \$ 83,024 \
\text { Virginia } & \$ 1,331,919 & & \$ 1,438,439 \
\text { Other } & \underline { \$ 68,203 } & & \underline{\$ 68,203} \
\text { Totals } & \$ 1,535,528 & & \$ 1,631,649
\end{array}
\end{array}$$ What is Tennis Pro's Virginia property numerator and property factor?

Accepted Answer

$1,385,179

Question 16

A unitary return includes only companies included on a federal consolidated tax return.

Accepted Answer

A) True 
 B)False

Question 17

Separate return states require each member of a consolidated group with nexus to file their own state tax return.

Accepted Answer

A) True 
 B)False

Question 18

A state's apportionment formula usually relies on some variation of sales, payroll, and property factors.

Accepted Answer

A) True 
 B)False

Question 19

Della Corporation is headquartered in Carlisle, Pennsylvania. Della has a Pennsylvania state income tax base of $425,000. Of this amount, $75,000 was nonbusiness income. Della's Pennsylvania apportionment factor is 28.52 percent. The nonbusiness income allocated to Pennsylvania was $61,000. Assuming a Pennsylvania corporate tax rate of 7.75 percent, what is Della's Pennsylvania state tax liability?

Accepted Answer

A)  $8,821 
B)  $9,084 
C)  $12,464 
D)  $13,549 
A)  $8,821 
B)  $9,084 
C)  $12,464 
D)  $13,549

Question 20

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

Accepted Answer

A) True 
 B)False

Which of the following is not a primary revenue source for most states?

Which of the following regarding the state tax base is incorrect?

Commercial domicile is the location where a business is headquartered and directs its operations from.

Which of the following law types is not a primary source type?

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

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

All 50 states impose a sales and use tax system.

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

Which of the following sales is always subject to sales and use tax?

A unitary return includes only companies included on a federal consolidated tax return.

Separate return states require each member of a consolidated group with nexus to file their own state tax return.

A state's apportionment formula usually relies on some variation of sales, payroll, and property factors.

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

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating 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 of the Cfa Institute

Filters

Exam 23: State and Local Taxes

Which of the following is not a primary revenue source for most states?

Which of the following regarding the state tax base is incorrect?

Commercial domicile is the location where a business is headquartered and directs its operations from.

Which of the following law types is not a primary source type?

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

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

All 50 states impose a sales and use tax system.

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

Which of the following sales is always subject to sales and use tax?

A unitary return includes only companies included on a federal consolidated tax return.

Separate return states require each member of a consolidated group with nexus to file their own state tax return.

A state's apportionment formula usually relies on some variation of sales, payroll, and property factors.

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

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating 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 of the Cfa Institute

Filters