Question 1

The Mobil decision identified three factors to determine whether a group of companies are unitary.

Accepted Answer

A) True 
 B)False

Question 2

The trade-show rule allows businesses to maintain a sample room for up to four weeks per year.

Accepted Answer

A) True 
 B)False

Question 3

In recent years, states are weighting the sales factor because it is easier to calculate.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is true regarding state and local taxes?

Accepted Answer

A)  Every jurisdiction imposes a sales or use tax. 
B)  All states impose a state income tax. 
C)  The primary purpose of state and local taxes is to raise revenue. 
D)  Property taxes are primarily used to finance a State's general revenue fund. 
A)  Every jurisdiction imposes a sales or use tax. 
B)  All states impose a state income tax. 
C)  The primary purpose of state and local taxes is to raise revenue. 
D)  Property taxes are primarily used to finance a State's general revenue fund.

Question 5

Which of the following activities will create sales tax nexus?

Accepted Answer

A)  Advertising using television commercials. 
B)  Electronic delivery of software. 
C)  Delivery of sales by UPS. 
D)  Sales people physically located in a state from which they only take orders. 
A)  Advertising using television commercials. 
B)  Electronic delivery of software. 
C)  Delivery of sales by UPS. 
D)  Sales people physically located in a state from which they only take orders.

Question 6

Many states are either starting to or are in the process of expanding the types of services subject to sales tax.

Accepted Answer

A) True 
 B)False

Question 7

All of the following are false regarding apportionment except?

Accepted Answer

A)  Applies to both business and nonbusiness income. 
B)  Applies to only nonbusiness income. 
C)  Investment income is subject to apportionment. 
D)  Applies to only business income. 
A)  Applies to both business and nonbusiness income. 
B)  Applies to only nonbusiness income. 
C)  Investment income is subject to apportionment. 
D)  Applies to only business income.

Question 8

Physical presence does not always create sales and use tax nexus.

Accepted Answer

A) True 
 B)False

Question 9

Bethesda Corporation is unprotected from income tax by Public Law 86-272. Which of the following characteristics creates a problem for Bethesda in states other than Maryland?

Accepted Answer

A)  All in-state services are limited to solicitation in states other than Maryland. 
B)  Bethesda sells copier equipment and copy center services. 
C)  All orders are approved in Maryland. 
D)  Bethesda does business in Maryland and five other states. 
A)  All in-state services are limited to solicitation in states other than Maryland. 
B)  Bethesda sells copier equipment and copy center services. 
C)  All orders are approved in Maryland. 
D)  Bethesda does business in Maryland and five other states.

Question 10

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis Pro has payroll as follows:   The other total includes $10,000 of salary of a Virginia employee that works part time in another state. What isTennis Pro's Virginia payroll numerator and payroll factor?

Accepted Answer

$260,000 and 55.85 percent.
$2

Question 11

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

60 percent and 20 pe

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

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

Question 14

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)  Defined solicitation for purposes of Public Law 86-272. 
C)  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. 
D)  Spelled out four criteria for determining whether states may subject nondomiciliary companies to an income tax. 
A)  An out-of-state mail-order company did not have a sales tax collection responsibility because it lacked physical presence. 
B)  Defined solicitation for purposes of Public Law 86-272. 
C)  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. 
D)  Spelled out four criteria for determining whether states may subject nondomiciliary companies to an income tax.

Question 15

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, Iowa, Michigan, Minnesota, Wisconsin, and Wyoming. It has sales personnel only where discussed.Determine the state in which Mighty Manny does not have sales and use tax nexus given the following scenarios:

Accepted Answer

A)  Mighty Manny's trucks drive through Nebraska to deliver goods to Mighty Manny's customers in other states. 
B)  Mighty Manny has sales personnel that visit Minnesota. These sales employees follow procedures that comply with Public Law 86-272. The orders are received and sent to Michigan for acceptance. The goods are shipped by FedEx into Minnesota. 
C)  Mighty Manny provides design services to another manufacturer located in Wisconsin. While the services are performed in Michigan, Mighty Manny's designers visit Wisconsin at least quarterly to deliver the new designs and receive feedback. 
D)  Mighty Manny receives online orders from its Illinois client. Because the orders are so large, the goods are delivered weekly on Mighty Manny's trucks. 
A)  Mighty Manny's trucks drive through Nebraska to deliver goods to Mighty Manny's customers in other states. 
B)  Mighty Manny has sales personnel that visit Minnesota. These sales employees follow procedures that comply with Public Law 86-272. The orders are received and sent to Michigan for acceptance. The goods are shipped by FedEx into Minnesota. 
C)  Mighty Manny provides design services to another manufacturer located in Wisconsin. While the services are performed in Michigan, Mighty Manny's designers visit Wisconsin at least quarterly to deliver the new designs and receive feedback. 
D)  Mighty Manny receives online orders from its Illinois client. Because the orders are so large, the goods are delivered weekly on Mighty Manny's trucks.

Question 16

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 h

Question 17

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis pro decides to expand into Pennsylvania during the current year and try some new sales techniques. Tennis pro advertises on local radio and television as well as national tennis magazines sent into PA. Salesmen give away promotional materials and occasionally sell demonstration models to local shop employees to build goodwill for Tennis Pro. It holds sales meetings at rented space in local hotels. Personneloccasionally fix minor problems such as tape and strings without charge. One employee performed a credit check for a major account who needed merchandise immediately. Each sales person isallowed an allowance for a car and office equipment to be maintained in an in-home office. Do any of Tennis Pro activities have the potential to create income tax nexus?

Accepted Answer

The sale of demonstr

Question 18

Della Corporation is headquartered in Carlisle, Pennsylvania. Della has a Pennsylvania state income tax base of $425,000. Of this amount, $75,000 was nonbusiness income. Della's Pennsylvania apportionment factor is 28.52 percent. The nonbusiness income allocated to Pennsylvania was $61,000. Assuming a Pennsylvania corporate tax rate of7.75 percent, what is Della's Pennsylvania state tax liability? (Round your answer to the nearest whole number)

Accepted Answer

A)  $8,821. 
B)  $13,549. 
C)  $9,084. 
D)  $12,464. 
A)  $8,821. 
B)  $13,549. 
C)  $9,084. 
D)  $12,464.

Question 19

The Wrigley case held that the sale of intangibles is protected by Public Law 86-272.

Accepted Answer

A) True 
 B)False

Question 20

Tennis Pro, a Virginia Corporation domiciled in Virginia, has the following items of income: $5,000 of dividend income, $15,000 of interest income, $10,000 of rental income from Georgia property,$30,000 of royalty income for an intangible used in Maryland (where nexus exists). Determine how much income is allocated to Virginia.

Accepted Answer

$20,000.
$

Exam 23: State and Local Taxes

The Mobil decision identified three factors to determine whether a group of companies are unitary.

The trade-show rule allows businesses to maintain a sample room for up to four weeks per year.

In recent years, states are weighting the sales factor because it is easier to calculate.

Which of the following is true regarding state and local taxes?

Which of the following activities will create sales tax nexus?

Many states are either starting to or are in the process of expanding the types of services subject to sales tax.

All of the following are false regarding apportionment except?

Physical presence does not always create sales and use tax nexus.

Bethesda Corporation is unprotected from income tax by Public Law 86-272. Which of the following characteristics creates a problem for Bethesda in states other than Maryland?

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis Pro has payroll as follows: The other total includes $10,000 of salary of a Virginia employee that works part time in another state. What isTennis Pro's Virginia payroll numerator and payroll factor?

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?

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

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

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

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

The Wrigley case held that the sale of intangibles is protected by Public Law 86-272.

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

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

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