Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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 3

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 sales and use tax nexus in Connecticut, New Jersey, New York, Pennsylvania, Rhode Island, and South Carolina. Mighty Manny has sales as follows: $$\begin{array}{l}
\quad\quad\quad\quad\quad\quad\quad\text { Mighty Manny's Sales }\\
\begin{array} { l r r r } 
 { \text { State } } &  { \text { Goods } } & \text { Services } & { \text { Total } } \
\hline \text { Connecticut } & \$ 359,294 & \$ 39,201 & \$ 398,495 \
\text { New Jersey } & 1,304,292 & 382,984 & 1,687,276 \
\text { New York } & 929,402 & 325,327 & 1,254,729 \
\text { Pennsylvania } & 320,481 & 93,203 & 413,684 \
\text { Rhode Island } & 85,419 & 0 & 85,419 \
\text { South } & & & \
\text { Carolina } & \underline { 52,427 } & \underline { 0 } & \underline { 52,427 } \
\text { Totals } & \$ 3,051,315 & \$ 840,715 & \$ 3,892,030
\end{array}
\end{array}$$ Assume the following sales tax rates: Connecticut (6.75 percent), New Jersey (7.5 percent), New York (8.5 percent), Pennsylvania (6.5 percent), Rhode Island (7.25 percent), and South Carolina (5.5 percent). Assume that Connecticut also taxes Mighty Manny's services. What is Mighty Manny's total sales and use tax liability?

Accepted Answer

The answer of Mighty Manny, Incorporated manufactures and services deli...

Question 4

Which of the following is true regarding state and local taxes?

Accepted Answer

A)  All states impose a state income tax. 
B)  Every jurisdiction imposes a sales or use tax. 
C)  The primary purpose is to raise revenue. 
D)  Property taxes are primarily used to finance a State's general revenue fund. 
A)  All states impose a state income tax. 
B)  Every jurisdiction imposes a sales or use tax. 
C)  The primary purpose is to raise revenue. 
D)  Property taxes are primarily used to finance a State's general revenue fund.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

The Mobil decision identified three factors to determine whether a group of companies are unitary.

Accepted Answer

A) True 
 B)False

Question 7

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. Is Tennis Pro subject to Ohio's Commercial Activity Tax?

Accepted Answer

The answer of Gordon operates the Tennis Pro Shop in...

Question 8

Giving samples and promotional materials without charge is a protected solicitation activity.

Accepted Answer

A) True 
 B)False

Question 9

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis Pro has payroll as follows: Tennis Pro's
Payroll:
$\begin{array}{lr}
\text { State } &{\text { Pavroll }} \
\hline
\text { DC } & \$ 45,500 \
\text { Georgia }&\$ 80,000\
\text { Veorgia } & \$ 250,000 \
\text { Other } & \underline{\$ 90,000} \
\text { Totals } & \$ 465,500\
\end{array}$ 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?

Accepted Answer

$260,000 a

Question 10

Tennis Pro has the following sales, payroll and property factors: $$\begin{array} { l r r } 
& \text { Virginia } & \text { Maryland } \
\text { Sales } & 40 \% & 20 \% \
\text { Payroll } & 70 \% & 5 \% \
\text { Property } & 90 \% & 5 \%
\end{array}$$ What would Tennis Pro's Virginia and Maryland apportionment factors be if Virginia used a double-weighted sales four factor method and Maryland used a single-factor sales formula?

Accepted Answer

60 percent

Question 11

Several states are now asserting economic nexus.

Accepted Answer

A) True 
 B)False

Question 12

Which of the items is correct regarding a use tax?

Accepted Answer

A)  Use taxes are imposed by every state. 
B)  Use taxes only apply when the seller is not required to collect the sales tax. 
C)  Amazon collects use taxes for all of its customers. 
D)  States choose to implement either a sales tax or a use tax. 
A)  Use taxes are imposed by every state. 
B)  Use taxes only apply when the seller is not required to collect the sales tax. 
C)  Amazon collects use taxes for all of its customers. 
D)  States choose to implement either a sales tax or a use tax.

Question 13

Super Sadie, Incorporated manufactures sandals and distributes them across the southwestern United States. Assume that Super Sadie has sales and use tax nexus in Arizona, California, Colorado, New Mexico, and Texas. Super Sadie has sales as follows: $$\begin{array}{l}
\quad\quad\text { Super Sadie Sales }\
\begin{array} { l r } 
\text { State } & \underline { \text { Goods } } \
\text { Arizona } & \$ 583,194 \
\text { California } & 1,003,923 \
\text { Colorado } & 487,204 \
\text { New } & \
\text { Mexico } & 201,932 \
\text { Oregon } & 502,940 \
\text { Texas } & 892,048 \
\text { Utah } & \underline { 302,109 } \
\text { Totals } & \$ 3,973,350
\end{array}
\end{array}$$ Assume the following sales tax rates: Arizona (6 percent), California (8 percent), Colorado (7 percent), New Mexico (6.5 percent), Oregon (7.25 percent), Texas (8 percent), and Utah (5 percent). What is Super Sadie's total sales and use tax liability?

Accepted Answer

The answer of Super Sadie, Incorporated manufactures sandals and distributes...

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Historically, most states used an equally weighted three-factor apportionment formula.

Accepted Answer

A) True 
 B)False

Question 16

Public Law 86-272 protects a taxpayer from which of the following taxes?

Accepted Answer

A)  Texas Margin Tax (a tax with net income, gross receipts, and capital worth components). 
B)  Washington Business and Occupation Tax (a gross receipts tax). 
C)  Ohio Commercial Activity Tax (an excise tax with a gross receipts base). 
D)  California Franchise Tax (a net income tax). 
A)  Texas Margin Tax (a tax with net income, gross receipts, and capital worth components). 
B)  Washington Business and Occupation Tax (a gross receipts tax). 
C)  Ohio Commercial Activity Tax (an excise tax with a gross receipts base). 
D)  California Franchise Tax (a net income tax).

Question 17

Businesses engaged in interstate commerce are subject to tax in every state where they operate.

Accepted Answer

A) True 
 B)False

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

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

Which of the following is true regarding state and local taxes?

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

The Mobil decision identified three factors to determine whether a group of companies are unitary.

Giving samples and promotional materials without charge is a protected solicitation activity.

Several states are now asserting economic nexus.

Which of the items is correct regarding a use tax?

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

Historically, most states used an equally weighted three-factor apportionment formula.

Public Law 86-272 protects a taxpayer from which of the following taxes?

Businesses engaged in interstate commerce are subject to tax in every state where they operate.

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

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

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

Which of the following is true regarding state and local taxes?

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

The Mobil decision identified three factors to determine whether a group of companies are unitary.

Giving samples and promotional materials without charge is a protected solicitation activity.

Several states are now asserting economic nexus.

Which of the items is correct regarding a use tax?

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

Historically, most states used an equally weighted three-factor apportionment formula.

Public Law 86-272 protects a taxpayer from which of the following taxes?

Businesses engaged in interstate commerce are subject to tax in every state where they operate.

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