Exam 16: Multi-State Corporate Taxations

If a gift card is unused after a specified period of time, the state can collect the amount of the card proceeds from the seller, as ____________________ property.

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

A state sales tax usually falls upon:

Match each of the following terms with the appropriate description, in the state income tax formula. Apply the UDITPA rules in your responses. -Federal depreciation deduction in excess of state amount.

Britta Corporation's entire operations are located in State A. Eighty percent ($800,000) of Britta's sales are made in A and the remaining sales ($200,000) are made in State B. B has not adopted a corporate income tax. If A has adopted a throwback rule, the numerator of Britta's A sales factor is:

When the taxpayer has exposure to a capital stock tax:

When the taxpayer operates in one or more unitary states:

For most taxpayers, which of the traditional apportionment factors yields the greatest opportunities for tax reduction?

Adams Corporation owns and operates two manufacturing facilities, one in State X and the other in State Y. Due to a temporary decline in the corporation's sales, Adams has rented 20% of its Y facility to an unaffiliated corporation. Adams generated $1,000,000 net rental income and $5,000,000 income from manufacturing. ​ Adams is incorporated in Y. For X and Y purposes, rental income is classified as allocable nonbusiness income. By applying the statutes of each state, Adams determined that its apportionment factors are .65 for X and .35 for Y. ​ Adams's income attributed to X is:

An LLC apportions and allocates its annual taxable income in the same manner used by any other business operating in the state.

P.L. 86-272 ____________________ (does/does not) create nexus when the seller inserts advertising flyers into the Sunday newspaper that is sold in the state.

State and local politicians tend to apply new and increased taxes to taxpayers who are non resident visitors to the jurisdiction, such as a tax on auto rentals, because the taxpayer cannot vote to reelect the lawmaker.

A state sales tax usually falls upon:

You are completing the State A income tax return for Quaint Company, LLC. Quaint operates in various states, showing the following results. Ordinary income \ 800,000 Net capital loss (60,000) Interest income, IBM bond 40,000 In A, all interest is treated as apportionable income. A uses a sales-only apportionment factor. Compute Quaint's A taxable income. ​ State A All Other States T otal Sales \ 800,000 \ 1,200,000 \ 2,000,000 Property (average cost) 250,000 2,000,000 2,250,000 Payroll 300,000 700,000 1,000,000

Most states begin the computation of corporate taxable income with an amount from the Federal income tax return.

A number of court cases in the last several decades have involved the application of a state's nexus rules concerning a business taxpayer. What is the significance of the term nexus when discussing state income taxation?

A state might levy a(n) ____________________ tax when an investor sells shares of stock.

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected. -A garment purchased by an employee for wear at an office job.

____________________ describe(s) the degree of business activity that must be present before a taxing jurisdiction has the right to impose a tax on an out-of-state entity's income.

Hendricks Corporation sells widgets in two states. State A levies a 9% effective tax rate, and State B levies a 3% rate. A and B have adopted sales-factor-only apportionment formulas. To reduce overall multistate income tax liabilities, Hendricks should: