Question 1

Moss Incorporated is a Washington corporation. It properly included, deducted, or excluded the following items on its federal tax return in the current year:
  Moss's Oregon depreciation was $145,585. Moss's federal taxable income was $549,913. Assuming Oregon taxes all municipal bond interest, calculate Moss's Oregon state tax base.

Accepted Answer

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Question 2

Interest and dividends are allocated to the state of commercial domicile.

Accepted Answer

A) True 
 B)False  True

Question 3

The annual value of rented property is not included in the property factor.

Accepted Answer

A) True 
 B)False  False

Question 4

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. Roxy's total Maryland sales are $20,000 on 15 transactions. 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 collection obligation?

Accepted Answer

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

Question 5

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, Michigan, Minnesota, and Wisconsin. It has sales personnel only in the states discussed and all these states have adopted Wayfair legislation. Determine the state in which Mighty Manny does not have sales and nexus given the following scenarios:

Accepted Answer

A)   Mighty Manny is incorporated and headquartered in Michigan. It also has property, employees, sales personnel, and intangibles in Michigan.
B)   Mighty Manny has a warehouse in Illinois.
C)   Mighty Manny has independent sales representatives in Minnesota that make $150,000 of sales on 100 transactions. The representatives distribute ice scraper-related items for over a dozen companies.
D)   Mighty Manny has two customers in Wisconsin. Mighty Manny receives $50,000 on 20 orders over the phone and ships goods to its customers using FedEx.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Tennis Pro is headquartered in Virginia. Assume it has a Kentucky state income tax base of $250,000. Of this amount, $46,000 was nonbusiness income. Assume that Tennis Pro's Kentucky sales, payroll, and property apportionment factor are 12, 5, and 3 percent, respectively. Assume that Kentucky uses a single-factor sales formula apportionment method. The nonbusiness income allocated to Kentucky was $4,000. Assuming Kentucky's corporate tax rate is 6 percent, what is Tennis Pro's Kentucky state income tax liability?

Accepted Answer

The answer of Tennis Pro is headquartered in Virginia. Assume...

Question 8

The Wayfair decision held that an out-of-state mail-order company did not have sales tax collection responsibility because it lacked physical presence.

Accepted Answer

A) True 
 B)False

Question 9

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 $119,000. If Illinois only requires Illinois taxes to be added back, calculate PWD's Illinois state tax base.

Accepted Answer

A)   $134,943
B)   $149,447
C)   $150,418
D)   $165,479

Question 10

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. The shop sells, manufactures, 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 $2,000 racquet to a Tennessee resident that purchases the merchandise in the Virginia retail store?

Accepted Answer

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

Question 11

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.

Question 12

Super Sadie, Incorporated, manufactures sandals and distributes them across the southwestern United States. Assume that Super Sadie has sales tax nexus in Arizona, California, Colorado, New Mexico, and Texas. Super Sadie has sales as follows:
  Assume the following sales tax rates: Arizona (6 percent), California (8 percent), Colorado (7 percent), New Mexico (6.5 percent), Pennsylvania (7.25 percent), Texas (8 percent), and Utah (5 percent). What is Super Sadie's total sales and use tax liability? (Round your interim calculations to the nearest whole number.)

Accepted Answer

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

Question 13

Moss Incorporated is a Washington corporation. It properly included, deducted, or excluded the following items on its federal tax return in the current year:
  Moss's Oregon depreciation was $145,500. Moss's federal taxable income was $549,743. Assuming Oregon taxes all municipal bond interest, calculate Moss's Oregon state tax base.

Accepted Answer

The answer of Moss Incorporated is a Washington corporation. It...

Question 14

Tennis Pro has the following sales, payroll, and property factors:
  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

The answer of Tennis Pro has the following sales, payroll,...

Question 15

Public Law 86-272 was a congressional response to Northwestern States Portland Cement.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)   Functional integration
B)   Centralized management
C)   Economies of scale
D)   Consolidated return status

Question 17

On which of the following transactions should sales tax generally be collected?

Accepted Answer

A)   Architecture plans delivered out of state through the mail.
B)   Sales of woolen goods to a state without economic sales tax nexus delivered through common carrier.
C)   Accounting services provided in Alaska.
D)   Meal purchased at McDonald's.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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. If Illinois only requires Illinois taxes to be added back, calculate PWD's Illinois state tax base.

Accepted Answer

A)   $116,000
B)   $130,833
C)   $131,000
D)   $145,833

Question 20

Tennis Pro, a Virginia corporation domiciled in Virginia, has the following items of income: $5,400 of dividend income, $15,800 of interest income, $10,160 of rental income from Georgia property, and $30,240 of royalty income for an intangible used in Maryland (whereincome tax nexus exists). Determine how much income is allocated to Virginia.

Accepted Answer

The answer of Tennis Pro, a Virginia corporation domiciled in...

Exam 12: State and Local Taxes

Interest and dividends are allocated to the state of commercial domicile.

The annual value of rented property is not included in the property factor.

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

The Wayfair decision held that an out-of-state mail-order company did not have sales tax collection responsibility because it lacked physical presence.

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 $119,000. If Illinois only requires Illinois taxes to be added back, calculate PWD's Illinois state tax base.

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

Tennis Pro has the following sales, payroll, and property factors: 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?

Public Law 86-272 was a congressional response to Northwestern States Portland Cement.

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

On which of the following transactions should sales tax generally be collected?

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

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. If Illinois only requires Illinois taxes to be added back, calculate PWD's Illinois state tax base.