Question 1

Which of the following activities will create sales tax nexus?

Accepted Answer

A)  Advertising using television commercials. 
B)  Salesmen who only take orders. 
C)  Delivery of sales by UPS. 
D) Electronic delivery of software. 
A)  Advertising using television commercials. 
B)  Salesmen who only take orders. 
C)  Delivery of sales by UPS. 
D) Electronic delivery of software.

Question 2

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 3

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

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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 Jersey, New York, Penns

Question 6

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. Determine the sales and use tax liability that the Shop must collect and remit if it sells a $1,000 racquet order to an Alaska customer (assume the Shop has no sales personnel or property in Alaska) that purchases the merchandise over the internet?

Accepted Answer

$0.
Explanation: The Shop has

Question 7

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 8

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 9

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

Accepted Answer

A) True 
 B)False

Question 10

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 11

All 50 states impose a sales and use tax system.
Alaska, Delaware, Montana, New Hampshire, and Oregon do not.

Accepted Answer

A) True 
 B)False

Question 12

All states employ some combination of sales and use tax, income or franchise tax, or property tax to fund their government operations.

Accepted Answer

A) True 
 B)False

Question 13

Big Company and Little Company are both owned by Mrs. Big. 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?

Accepted Answer

For a unitary tax return: functional int

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

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

Accepted Answer

A) True 
 B)False

Question 16

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 17

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

Accepted Answer

A)  $116,000 
B)  $130,833 
C)  $131,000 
D) $164,333 
A)  $116,000 
B)  $130,833 
C)  $131,000 
D) $164,333

Which of the following activities will create sales tax nexus?

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

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

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

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

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

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

Which of the following is incorrect regarding nondomiciliary businesses?

All 50 states impose a sales and use tax system. Alaska, Delaware, Montana, New Hampshire, and Oregon do not.

All states employ some combination of sales and use tax, income or franchise tax, or property tax to fund their government operations.

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

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

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

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, 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

Filters

Exam 12: State and Local Taxes

Which of the following activities will create sales tax nexus?

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

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

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

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

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

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

Which of the following is incorrect regarding nondomiciliary businesses?

All 50 states impose a sales and use tax system. Alaska, Delaware, Montana, New Hampshire, and Oregon do not.

All states employ some combination of sales and use tax, income or franchise tax, or property tax to fund their government operations.

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

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

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

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, 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

Filters