Question 1

The sales and use tax base varies from state to state.

Accepted Answer

A) True 
 B)False

Question 2

Assume Tennis Pro discovered that one salesman has gone into Arkansas once each year of the past 4 years and performed activities creating both sales and use tax nexus and income tax nexus. Assume that Arkansas sales were $25,000 each year. Assume that Arkansas business income would be 200,000 each year and that Tennis Pro's Arkansas apportionment percentage would be 1 percent. Assume there would be no Arkansas nonbusiness income. Assume that Arkansas sales and use tax rate was 6.5 percent and corporate income tax rate was 5 percent. What would Tennis Pro's Arkansas sales and use tax and income tax liability be ignoring any possible penalties and interest?

Accepted Answer

$6,500 and

Question 3

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

Accepted Answer

A)  An out-of-state mail-order company did not have a sales tax collection responsibility because it lacked physical presence. 
B)  Reaffirmed 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)  Reaffirmed 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

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 5

Super Sadie, Incorporated manufactures sandals and distributes them across the southwestern United States. Super Sadie is incorporated and headquartered in Arizona. It has product sales to customers in Arizona, California, Colorado, New Mexico, Oregon, Texas, and Utah. It has sales personnel in California, Colorado, and New Mexico. It also owns an office building in Arizona and a Warehouse in Texas. Determine the states in which Super Sadie has sales and use tax nexus.

Accepted Answer

Arizona, California,

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Roxy operates a dress shop in Arlington, Virginia. Lisa, a Maryland resident, comes in for a measurement and purchases a $1,500 dress that is shipped to her Maryland residence using a common carrier. Assuming that Virginia's sales tax rate is 5 percent and that Maryland's sales tax rate is 7 percent, what is Roxy's sales and use tax liability?

Accepted Answer

A)  $0. 
B)  $75 to Virginia. 
C)  $75 sales tax to Virginia and $15 use tax to Maryland. 
D)  $90 to Maryland. 
A)  $0. 
B)  $75 to Virginia. 
C)  $75 sales tax to Virginia and $15 use tax to Maryland. 
D)  $90 to Maryland.

Question 8

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. Assume that a District of Columbia customer picks up a $2,000 racquet order in the Blacksburg store and drives it back to the District of Columbia (where the sales tax rate is 8.5 percent). Determine the sales and use tax liability (assume the Shop has no sales personnel or property in District of Columbia) of the customer?

Accepted Answer

$100 of Virginia sal

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Nondomiciliary businesses are subject to tax everywhere they do business.

Accepted Answer

A) True 
 B)False

Question 11

Businesses subject to income tax in more than one jurisdiction have the right to apportionment.

Accepted Answer

A) True 
 B)False

Question 12

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 13

Carolina's Hats has the following sales, payroll and property factors: $$\begin{array} { l c c } 
& \begin{array} { c } 
\text { North } \
\text { Carolina }
\end{array} & \begin{array} { c } 
\text { South } \
\text { Carolina }
\end{array} \
\text { Sales }& 75.03 \% & 22.51 \% \
\text { Payroll } & 68.62 \% & 21.28 \% \
\text { Property} & 78.45 \% & 14.56 \%
\end{array}$$ What is Carolina's Hats North and South Carolina apportionment factors if North Carolina uses an equally-weighted three-factor formula and South Carolina uses a double-weighted sales factor formula?

Accepted Answer

A)  North Carolina 74.03 percent, and South Carolina 19.45 percent. 
B)  North Carolina 74.03 percent, and South Carolina 20.22 percent. 
C)  North Carolina 74.28 percent, and South Carolina 19.45 percent. 
D)  North Carolina 74.28 percent, and South Carolina 22.51 percent. 
A)  North Carolina 74.03 percent, and South Carolina 19.45 percent. 
B)  North Carolina 74.03 percent, and South Carolina 20.22 percent. 
C)  North Carolina 74.28 percent, and South Carolina 19.45 percent. 
D)  North Carolina 74.28 percent, and South Carolina 22.51 percent.

Question 14

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

Accepted Answer

Determine whether the seller has sales t

Question 15

PWD Incorporated is an Illinois corporation. It properly included, deducted, or excluded the following items on its federal tax return in the current year: $$\begin{array} { l r l } 
\text { Item } &  { \text { Amount } } { } & \text { Federal Treatment } \
\hline
\text { Illinois Income Taxes } & \$ 33,333 & \text { Deducted on federal return } \
\text { Indiana Income Taxes } & \$ 18,500 & \text { Deducted on federal return } \
\text { Ohio Commercial Activity Tax } & \$ 4,000 & \text { Deducted on federal return } \
\text { Illinois Bond Interest } & \$ 10,000 & \text { Excluded from federal return } \
\text { Indiana Bond Interest } & \$ 15,000 & \text { Excluded from federal return } \
\text { Federal T-Note Interest } & \$ 2,500 & \text { Included on federal return }
\end{array}$$ PWD's Federal Taxable Income was $100,000. Calculate PWD's Illinois state tax base.

Accepted Answer

A)  $116,000 
B)  $130,833 
C)  $131,000 
D)  $140,833 
A)  $116,000 
B)  $130,833 
C)  $131,000 
D)  $140,833

Question 16

Which of the following is incorrect regarding nondomiciliary businesses?

Accepted Answer

A)  Subject to tax only where nexus exists. 
B)  A business cannot be nondomiciliary where headquartered. 
C)  A business can be nondomiciliary in only one jurisdiction. 
D)  Subject to tax only where a sufficient connection exists. 
A)  Subject to tax only where nexus exists. 
B)  A business cannot be nondomiciliary where headquartered. 
C)  A business can be nondomiciliary in only one jurisdiction. 
D)  Subject to tax only where a sufficient connection exists.

Question 17

Which of the following states is not asserting economic nexus?

Accepted Answer

A)  New York with the Amazon rule. 
B)  South Carolina in the Geoffrey case. 
C)  West Virginia in the MBNA case. 
D)  Wisconsin in Wrigley. 
A)  New York with the Amazon rule. 
B)  South Carolina in the Geoffrey case. 
C)  West Virginia in the MBNA case. 
D)  Wisconsin in Wrigley.

Question 18

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

Accepted Answer

A)  Includes salaries, commissions, and bonuses. 
B)  Excludes compensation to independent contractors. 
C)  Allocates compensation for employees working in more than one state. 
D)  Assigns the payroll of each employee to a single state. 
A)  Includes salaries, commissions, and bonuses. 
B)  Excludes compensation to independent contractors. 
C)  Allocates compensation for employees working in more than one state. 
D)  Assigns the payroll of each employee to a single state.

Question 19

Bethesda Corporation is unprotected from income tax by Public Law 86-272. Which of the following characteristics 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 20

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.

The sales and use tax base varies from state to state.

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

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

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

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

Nondomiciliary businesses are subject to tax everywhere they do business.

Businesses subject to income tax in more than one jurisdiction have the right to apportionment.

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

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

Which of the following is incorrect regarding nondomiciliary businesses?

Which of the following states is not asserting economic nexus?

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

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

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

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

The sales and use tax base varies from state to state.

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

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

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

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

Nondomiciliary businesses are subject to tax everywhere they do business.

Businesses subject to income tax in more than one jurisdiction have the right to apportionment.

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

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

Which of the following is incorrect regarding nondomiciliary businesses?

Which of the following states is not asserting economic nexus?

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

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

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

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