Question 1

A unitary business applies a combined apportionment formula, including data from operations of all of the affiliates.

Accepted Answer

A) True 
 B)False

Question 2

Under P.L. 86-272, which of the following transactions by itself would create nexus with a state?

Accepted Answer

A)  Inspection by a sales employee of the customer's inventory for specific product lines. 
B)  Using an independent contractor who acts as a manufacturer's representative for the taxpayer through a sales office in the state. 
C)  Executing a sales campaign, using an advertising agency acting as an independent contractor for the taxpayer. 
D)  Maintenance of inventory in the state by an independent contractor under a consignment plan. 
A)  Inspection by a sales employee of the customer's inventory for specific product lines. 
B)  Using an independent contractor who acts as a manufacturer's representative for the taxpayer through a sales office in the state. 
C)  Executing a sales campaign, using an advertising agency acting as an independent contractor for the taxpayer. 
D)  Maintenance of inventory in the state by an independent contractor under a consignment plan.

Question 3

When the taxpayer operates in one or more unitary states:

Accepted Answer

A)  Apportionment factors are computed on a group-wide basis. 
B)  The tax incentive of creating nexus in a low-tax state is enhanced. 
C)  The tax benefit of a passive investment subsidiary holding company is neutralized. 
D)  The use of a water's edge election should be considered. 
E)  All of the above are true. 
A)  Apportionment factors are computed on a group-wide basis. 
B)  The tax incentive of creating nexus in a low-tax state is enhanced. 
C)  The tax benefit of a passive investment subsidiary holding company is neutralized. 
D)  The use of a water's edge election should be considered. 
E)  All of the above are true.

Question 4

José Corporation realized $900,000 taxable income from the sales of its products in States X and Z. José's activities in both states establish nexus for income tax purposes. José's sales, payroll, and property among the states include the following.   ​
X utilizes an equally weighted three-factor apportionment formula. How much of José's taxable income is apportioned to X?

Accepted Answer

A)  $120,000 
B)  $450,000 
C)  $780,000 
D)  $900,000 
A)  $120,000 
B)  $450,000 
C)  $780,000 
D)  $900,000

Question 5

Typically exempt from the sales/use tax base is the purchase of clothing from a neighbor's "garage sale."

Accepted Answer

A) True 
 B)False

Question 6

The throwback rule requires that:

Accepted Answer

A)  Sales of tangible personal property are attributed to the state where they originated, if the taxpayer is not taxable in the state of destination. 
B)  Sales of tangible personal property are attributed to the seller's state, even if the taxpayer is not taxable in the state of destination. 
C)  Sales of services are attributed to the state of commercial domicile. 
D)  Capital gain/loss is attributed to the state of commercial domicile. 
A)  Sales of tangible personal property are attributed to the state where they originated, if the taxpayer is not taxable in the state of destination. 
B)  Sales of tangible personal property are attributed to the seller's state, even if the taxpayer is not taxable in the state of destination. 
C)  Sales of services are attributed to the state of commercial domicile. 
D)  Capital gain/loss is attributed to the state of commercial domicile.

Question 7

Ting, a regional sales manager, works from her office in State W. Her region includes several states, as indicated in the sales report below. Determine how much of Ting's $300,000 compensation is assigned to the payroll factor of State W.

Accepted Answer

A)  $0. 
B)  $90,000. 
C)  $120,000. 
D)  $300,000. 
A)  $0. 
B)  $90,000. 
C)  $120,000. 
D)  $300,000.

Question 8

Match each of the following terms with the appropriate description, in the state income tax formula. Apply the UDITPA rules in your responses
-Deduction for advertising expenditures.

Accepted Answer

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

Question 9

Under P.L. 86-272, which of the following transactions by itself would create nexus with a state?

Accepted Answer

A)  Order solicitation for a plot of real estate, approved and filled from another state. 
B)  Order solicitation for a computer, approved and filled from another state. 
C)  Order solicitation for a machine, with credit approval from another state. 
D)  The conduct of a training seminar for sales personnel as to how to install and operate a new software product. 
A)  Order solicitation for a plot of real estate, approved and filled from another state. 
B)  Order solicitation for a computer, approved and filled from another state. 
C)  Order solicitation for a machine, with credit approval from another state. 
D)  The conduct of a training seminar for sales personnel as to how to install and operate a new software product.

Question 10

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
-A meal eaten at a restaurant while conducting business.

Accepted Answer

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

Question 11

In most states, a taxpayer's income is apportioned on the basis of a formula measuring the extent of business contact, and allocated according to the location of property owned or used.

Accepted Answer

A) True 
 B)False

Question 12

Match each of the following events, considered independently, to its likely effect on WillCo's various apportionment factors. WillCo is based in Q and has customers in Q, R, and S. To this point, WillCo has not established nexus with S. More than one choice may be correct
-WillCo completes the construction of production facilities in S.

Accepted Answer

A) No change in apportionment factors 
B) Q apportionment factor increases 
C) Q apportionment factor decreases 
D) R apportionment factor increases 
E) R apportionment factor decreases
F)S apportionment factor increases
G)S apportionment factor decreases 
A) No change in apportionment factors 
B) Q apportionment factor increases 
C) Q apportionment factor decreases 
D) R apportionment factor increases 
E) R apportionment factor decreases
F)S apportionment factor increases
G)S apportionment factor decreases

Question 13

In most states, Federal S corporations must make a separate state-level election of the flow-through status.

Accepted Answer

A) True 
 B)False

Question 14

In determining state taxable income, all of the following are adjustments to Federal income except:

Accepted Answer

A)  Federal net operating loss. 
B)  Federal income tax expense. 
C)  Fringe benefits paid to officers and executives. 
D)  Dividends received from other U.S. corporations. 
A)  Federal net operating loss. 
B)  Federal income tax expense. 
C)  Fringe benefits paid to officers and executives. 
D)  Dividends received from other U.S. corporations.

Question 15

A state sales tax usually falls upon:

Accepted Answer

A)  The sale of a used dinette set sold at a rummage sale. 
B)  The sale of a dinette set by the manufacturer to a furniture retailer. 
C)  The sale of a case of Bibles by the publisher to a church bookstore. 
D)  The sale of a Bible to a member of the church. 
E)  All of the above are exempt transactions. 
A)  The sale of a used dinette set sold at a rummage sale. 
B)  The sale of a dinette set by the manufacturer to a furniture retailer. 
C)  The sale of a case of Bibles by the publisher to a church bookstore. 
D)  The sale of a Bible to a member of the church. 
E)  All of the above are exempt transactions.

Question 16

In the broadest application of the unitary theory, the U.S. unitary business files a combined tax return using factors and income amounts for all affiliates:

Accepted Answer

A)  Organized in the U.S. 
B)  Organized in NAFTA countries. 
C)  Organized anywhere in the world. 
D)  As dictated by the tax treaties between the U.S. and the other countries. 
A)  Organized in the U.S. 
B)  Organized in NAFTA countries. 
C)  Organized anywhere in the world. 
D)  As dictated by the tax treaties between the U.S. and the other countries.

Question 17

A capital stock tax usually is structured as an excise tax imposed on a corporation's "net worth," using financial statement data to compute the tax.

Accepted Answer

A) True 
 B)False

Question 18

Most states' consumer sales taxes are paid by the final purchaser of the taxable asset.

Accepted Answer

A) True 
 B)False

Question 19

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
-Computer software, in the form of a disk purchased by an individual at a rummage sale.

Accepted Answer

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

Question 20

Most of the U.S. states have adopted an alternative minimum tax, similar to the Federal system, in taxing the income of corporations.

Accepted Answer

A) True 
 B)False

A unitary business applies a combined apportionment formula, including data from operations of all of the affiliates.

Under P.L. 86-272, which of the following transactions by itself would create nexus with a state?

When the taxpayer operates in one or more unitary states:

Typically exempt from the sales/use tax base is the purchase of clothing from a neighbor's "garage sale."

The throwback rule requires that:

Ting, a regional sales manager, works from her office in State W. Her region includes several states, as indicated in the sales report below. Determine how much of Ting's $300,000 compensation is assigned to the payroll factor of State W.

Match each of the following terms with the appropriate description, in the state income tax formula. Apply the UDITPA rules in your responses -Deduction for advertising expenditures.

Under P.L. 86-272, which of the following transactions by itself would create nexus with a state?

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 -A meal eaten at a restaurant while conducting business.

In most states, a taxpayer's income is apportioned on the basis of a formula measuring the extent of business contact, and allocated according to the location of property owned or used.

In most states, Federal S corporations must make a separate state-level election of the flow-through status.

In determining state taxable income, all of the following are adjustments to Federal income except:

A state sales tax usually falls upon:

In the broadest application of the unitary theory, the U.S. unitary business files a combined tax return using factors and income amounts for all affiliates:

A capital stock tax usually is structured as an excise tax imposed on a corporation's "net worth," using financial statement data to compute the tax.

Most states' consumer sales taxes are paid by the final purchaser of the taxable asset.

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 -Computer software, in the form of a disk purchased by an individual at a rummage sale.

Most of the U.S. states have adopted an alternative minimum tax, similar to the Federal system, in taxing the income of corporations.

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

A unitary business applies a combined apportionment formula, including data from operations of all of the affiliates.

Under P.L. 86-272, which of the following transactions by itself would create nexus with a state?

When the taxpayer operates in one or more unitary states:

Typically exempt from the sales/use tax base is the purchase of clothing from a neighbor's "garage sale."

The throwback rule requires that:

Ting, a regional sales manager, works from her office in State W. Her region includes several states, as indicated in the sales report below. Determine how much of Ting's $300,000 compensation is assigned to the payroll factor of State W.

Match each of the following terms with the appropriate description, in the state income tax formula. Apply the UDITPA rules in your responses -Deduction for advertising expenditures.

Under P.L. 86-272, which of the following transactions by itself would create nexus with a state?

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 -A meal eaten at a restaurant while conducting business.

In most states, a taxpayer's income is apportioned on the basis of a formula measuring the extent of business contact, and allocated according to the location of property owned or used.

In most states, Federal S corporations must make a separate state-level election of the flow-through status.

In determining state taxable income, all of the following are adjustments to Federal income except:

A state sales tax usually falls upon:

In the broadest application of the unitary theory, the U.S. unitary business files a combined tax return using factors and income amounts for all affiliates:

A capital stock tax usually is structured as an excise tax imposed on a corporation's "net worth," using financial statement data to compute the tax.

Most states' consumer sales taxes are paid by the final purchaser of the taxable asset.

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 -Computer software, in the form of a disk purchased by an individual at a rummage sale.

Most of the U.S. states have adopted an alternative minimum tax, similar to the Federal system, in taxing the income of corporations.

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