Question 1

Typically exempt from the sales/use tax base is the purchase by a symphony orchestra of printed music for its players.

Accepted Answer

A) True 
 B)False  True

Question 2

Usually a business chooses a location where it will build a new plant based chiefly on tax considerations.

Accepted Answer

A) True 
 B)False  False

Question 3

Bert Corporation, a calendar-year taxpayer, owns property in States M and O. Both M and O require that the average value of assets be included in the property factor. M requires that the property be valued at its historical cost, and O requires that the property be included in the property factor at its net depreciated book value.   Bert's State M property factor is:

Accepted Answer

A)  75.0%. 
B)  66.7%. 
C)  64.9%. 
D)  64.5%. 
A)  75.0%. 
B)  66.7%. 
C)  64.9%. 
D)  64.5%. C

Question 4

General Corporation is taxable in a number of states. This year, General made a $100,000 sale from its A headquarters to a State B office of an agency of the U.S. government. General has not established nexus with B. State A does not apply a throwback rule. In which state(s) will the sale be included in the sales factor numerator?

Accepted Answer

A)  In all of the states, according to the apportionment formulas of each, as the U.S. government is present in all states. 
B)  $100,000 in A. 
C)  $100,000 in B. 
D)  $0 in both A and B. 
A)  In all of the states, according to the apportionment formulas of each, as the U.S. government is present in all states. 
B)  $100,000 in A. 
C)  $100,000 in B. 
D)  $0 in both A and B.

Question 5

The benefits of a passive investment company typically include:

Accepted Answer

A)  Reduced state income taxes. 
B)  Isolation of the entity's portfolio income from taxation in other nonunitary states. 
C)  Exclusion of the subsidiary's portfolio income from the parent corporation's apportionment formula denominator in other nonunitary states. 
D)  All of the above are benefits. 
A)  Reduced state income taxes. 
B)  Isolation of the entity's portfolio income from taxation in other nonunitary states. 
C)  Exclusion of the subsidiary's portfolio income from the parent corporation's apportionment formula denominator in other nonunitary states. 
D)  All of the above are benefits.

Question 6

Guilford Corporation is subject to franchise tax in State Z. The tax is imposed at a rate of 2.5% of the taxpayer's net worth that is apportioned to the state by use of a two factor (sales and property equally weighted) formula. The property factor includes real and tangible personal property, valued at net book value at the end of the taxable year.
Sixty percent of Guilford's sales are attributable to Z, and $200,000 of the net book value of Guilford's tangible personal property is located in Z.
Determine the Z franchise tax payable by Guilford this year, given the following end-of-the year balance sheet.  
​

Accepted Answer

A)  $0, due to the negative retained earnings 
B)  $6,050 
C)  $8,250 
D)  $13,750 
A)  $0, due to the negative retained earnings 
B)  $6,050 
C)  $8,250 
D)  $13,750

Question 7

Politicians frequently use tax credits and exemptions to create economic development incentives.

Accepted Answer

A) True 
 B)False

Question 8

Roughly five percent of all taxes paid by businesses in the U.S. are to state, local, and municipal jurisdictions.

Accepted Answer

A) True 
 B)False

Question 9

A typical state taxable income addition modification is for the Federal income tax paid for the tax year.

Accepted Answer

A) True 
 B)False

Question 10

Sales/use tax nexus is established for the taxpayer by the sales-solicitation activities of an independent contractor acting on the taxpayer's behalf.

Accepted Answer

A) True 
 B)False

Question 11

Boot Corporation is subject to income tax in States A and B. Boot's operations generated $200,000 of apportionable income, and its sales and payroll activity and average property owned in each of the states is as follows.   ​
How much more (less) of Boot's income is subject to A income tax if, instead of using an equally-weighted three-factor apportionment formula, A uses a formula with a double-weighted sales factor?

Accepted Answer

A)  ($50,000) 
B)  $50,000 
C)  $16,100 
D)  ($16,100) 
A)  ($50,000) 
B)  $50,000 
C)  $16,100 
D)  ($16,100)

Question 12

In determining a corporation's taxable income for state income tax purposes, which of the following does not constitute a subtraction from Federal income?

Accepted Answer

A)  Interest on U.S. obligations. 
B)  Expenses that are directly or indirectly related to state and municipal interest that is taxable for state purposes. 
C)  Federal corporate income taxes paid. 
D)  The amount by which the Federal depreciation deduction exceeds the corresponding state amount. 
A)  Interest on U.S. obligations. 
B)  Expenses that are directly or indirectly related to state and municipal interest that is taxable for state purposes. 
C)  Federal corporate income taxes paid. 
D)  The amount by which the Federal depreciation deduction exceeds the corresponding state amount.

Question 13

When the taxpayer has exposure to a capital stock tax:

Accepted Answer

A)  The pricing of inventory sales should reflect no more than inflation increases. 
B)  Subsidiary operations should be funded through direct capital contributions. 
C)  Dividends should be paid regularly to a parent based in a low-tax state. 
D)  Expansions should be funded with retained earnings. 
A)  The pricing of inventory sales should reflect no more than inflation increases. 
B)  Subsidiary operations should be funded through direct capital contributions. 
C)  Dividends should be paid regularly to a parent based in a low-tax state. 
D)  Expansions should be funded with retained earnings.

Question 14

Match each of the following terms with the appropriate description, in the state income tax formula. Apply the UDITPA rules in your responses
-Treasury Bond interest income.

Accepted Answer

A) Addition modification 
B) Subtraction modification 
C) No modification 
A) Addition modification 
B) Subtraction modification 
C) No modification

Question 15

Match each of the following terms with the appropriate description, in the state income tax formula. Apply the UDITPA rules in your responses
-State-level NOL.

Accepted Answer

A) Addition modification 
B) Subtraction modification 
C) No modification 
A) Addition modification 
B) Subtraction modification 
C) No modification

Question 16

Net Corporation's sales office and manufacturing plant are located in State X. Net also maintains a manufacturing plant and sales office in State W. For purposes of apportionment, X defines payroll as all compensation paid to employees, including contributions to § 401(k) deferred compensation plans. Under the statutes of W, neither compensation paid to officers nor contributions to § 401(k) plans are included in the payroll factor. Net incurred the following personnel costs.   Net's payroll factor for State W is:

Accepted Answer

A)  50.00%. 
B)  37.50%. 
C)  33.33%. 
D)  0.00%. 
A)  50.00%. 
B)  37.50%. 
C)  33.33%. 
D)  0.00%.

Question 17

Cruz Corporation owns manufacturing facilities in States A, B, and C. A uses a three-factor apportionment formula under which the sales, property and payroll factors are equally weighted. B uses a three-factor apportionment formula under which sales are double-weighted. C employs a single-factor apportionment factor, based solely on sales.
Cruz's operations generated $1,000,000 of apportionable income, and its sales and payroll activity and average property owned in each of the three states is as follows.  
​
Cruz's apportionable income assigned to C is:

Accepted Answer

A)  $1,000,000. 
B)  $273,333. 
C)  $200,000. 
D)  $0. 
A)  $1,000,000. 
B)  $273,333. 
C)  $200,000. 
D)  $0.

Question 18

A state sales tax usually falls upon:

Accepted Answer

A)  Sales of groceries. 
B)  Sales of widgets made to out-of-state customers. 
C)  Sales of widgets made to the ultimate consumer of the product or service. 
D)  Sales of real estate. 
A)  Sales of groceries. 
B)  Sales of widgets made to out-of-state customers. 
C)  Sales of widgets made to the ultimate consumer of the product or service. 
D)  Sales of real estate.

Question 19

Match each of the following items with the appropriate description, in applying the P.L. 86-272 definition of solicitation
-Purchasing ads that show up on search-result screens for internet browsers.

Accepted Answer

A) More than solicitation, creates nexus 
B) Solicitation only, no nexus created 
A) More than solicitation, creates nexus 
B) Solicitation only, no nexus created

Question 20

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected
a.Taxable
b.Not taxable
-Prescription drugs and medicines purchased by a consumer.

Accepted Answer

A) Taxable 
B) Not taxable 
A) Taxable 
B) Not taxable

Typically exempt from the sales/use tax base is the purchase by a symphony orchestra of printed music for its players.

Usually a business chooses a location where it will build a new plant based chiefly on tax considerations.

The benefits of a passive investment company typically include:

Politicians frequently use tax credits and exemptions to create economic development incentives.

Roughly five percent of all taxes paid by businesses in the U.S. are to state, local, and municipal jurisdictions.

A typical state taxable income addition modification is for the Federal income tax paid for the tax year.

Sales/use tax nexus is established for the taxpayer by the sales-solicitation activities of an independent contractor acting on the taxpayer's behalf.

In determining a corporation's taxable income for state income tax purposes, which of the following does not constitute a subtraction from Federal income?

When the taxpayer has exposure to a capital stock tax:

Match each of the following terms with the appropriate description, in the state income tax formula. Apply the UDITPA rules in your responses -Treasury Bond interest income.

Match each of the following terms with the appropriate description, in the state income tax formula. Apply the UDITPA rules in your responses -State-level NOL.

A state sales tax usually falls upon:

Match each of the following items with the appropriate description, in applying the P.L. 86-272 definition of solicitation -Purchasing ads that show up on search-result screens for internet browsers.

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected a.Taxable b.Not taxable -Prescription drugs and medicines purchased by a consumer.

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, Operation, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 16: Multistate Corporate Taxation

Typically exempt from the sales/use tax base is the purchase by a symphony orchestra of printed music for its players.

Usually a business chooses a location where it will build a new plant based chiefly on tax considerations.

The benefits of a passive investment company typically include:

Politicians frequently use tax credits and exemptions to create economic development incentives.

Roughly five percent of all taxes paid by businesses in the U.S. are to state, local, and municipal jurisdictions.

A typical state taxable income addition modification is for the Federal income tax paid for the tax year.

Sales/use tax nexus is established for the taxpayer by the sales-solicitation activities of an independent contractor acting on the taxpayer's behalf.

In determining a corporation's taxable income for state income tax purposes, which of the following does not constitute a subtraction from Federal income?

When the taxpayer has exposure to a capital stock tax:

Match each of the following terms with the appropriate description, in the state income tax formula. Apply the UDITPA rules in your responses -Treasury Bond interest income.

Match each of the following terms with the appropriate description, in the state income tax formula. Apply the UDITPA rules in your responses -State-level NOL.

A state sales tax usually falls upon:

Match each of the following items with the appropriate description, in applying the P.L. 86-272 definition of solicitation -Purchasing ads that show up on search-result screens for internet browsers.

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected a.Taxable b.Not taxable -Prescription drugs and medicines purchased by a consumer.

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, Operation, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters