Question 1

The typical local property tax falls on both an investor's principal residence and her stock portfolio.

Accepted Answer

A) True 
 B)False

Question 2

A city might assess a recording tax when a business takes out a mortgage on its real estate.

Accepted Answer

A) True 
 B)False

Question 3

Ting, a regional sales manager, works from her office in State W. Her region includes several states as indicated in the following sales report. Determine how much of Ting's $300,000 compensation is assigned to the payroll factor of State W. $$\begin{array} { l r r } 
\text { State } & \text { Sales Generated } & \text { Ting's Time Spent There } \
\text { U } & \$ 1,000,000 & 15 \% \
\text { V } & 5,000,000 & 55 \% \
\text { W } & \underline { 4,000,000 } & \underline { 30 \% } \
& \$ 10,000,000 & 100 \%
\end{array}$$

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 4

Sylvia spends time working at the offices of her employer as a consultant to clients who are located in three different U.S. states. Sylvia's compensation is assigned to the payroll factors) of which states)? Apply the general UDITPA rules.

Accepted Answer

The compensation of an employee generall

Question 5

An)________ business operates in concert with its affiliated companies. As a result, the affiliates'
data are included in the parent's apportionment computations.

Accepted Answer

The answer of An)________ business operates in concert with its...

Question 6

P.L. 86-272________ does/does not) create income-tax nexus when the sales representative approves a sale at the customer's location.

Accepted Answer

The answer of P.L. 86-272________ does/does not) create income-tax nexus...

Question 7

The model law relating to the assignment of income among the states for corporations is:

Accepted Answer

A)  Public Law 86-272. 
B)  The Multistate Tax Treaty. 
C)  The Multistate Tax Commission MT
C) . 
D)  The Uniform Division of Income for Tax Purposes Act UDITP
A) . 
A)  Public Law 86-272. 
B)  The Multistate Tax Treaty. 
C)  The Multistate Tax Commission MT
C) . 
D)  The Uniform Division of Income for Tax Purposes Act UDITP
A) .

Question 8

Given the following transactions for the year, determine Comp Corporation's D payroll factor denominator. State D has adopted the principles of UDITPA. $\begin{array}{lr}
\text { Compensation of sales force } & \$ 600,000 \
\text { Compensation paid to independent contractors } & 300,000 \
\text { Compensation paid to managers of nonbusiness rental property } & 100,000 \
\text { Total compensation } & \$ 1,000,000
\end{array}$

Accepted Answer

A)  $900,000 
B)  $700,000 
C)  $600,000 
A)  $900,000 
B)  $700,000 
C)  $600,000

Question 9

Match each of the following items with the appropriate description in determining whether sales/use tax typically must be collected.
-Prescription drugs and medicines purchased by a consumer.

Accepted Answer

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

Question 10

The sales/use tax that is employed by most U.S. states does not fall on all retail transactions. Identify at least five sales/use tax exemptions that states often allow that eliminate certain transactions from the tax base.

Accepted Answer

Most state and local governments allow t

Question 11

Match each of the following terms with the appropriate description in the state income tax formula. Apply the
UDITPA rules in your responses.
-Dividend income from P & G stock held.

Accepted Answer

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

Question 12

Under the UDITPA's_________ concept, sales are assumed to take place at the point of delivery as opposed to the location at which the shipment originates.

Accepted Answer

ultimate d

Question 13

Parent and Minor form a non-unitary group of corporations. Parent is located in a state with an effective tax rate of 3% and Minor's effective tax rate is 9%. Acting in concert to reduce overall tax liabilities, the group should:

Accepted Answer

A)  Have Parent charge Minor an annual management fee. 
B)  Shift Parent's high-cost assembly and distribution operations to Minor. 
C)  Execute an intercompany loan such that Minor pays deductible interest to Parent. 
D)  Do all of these. 
E)  Do none of these. 
A)  Have Parent charge Minor an annual management fee. 
B)  Shift Parent's high-cost assembly and distribution operations to Minor. 
C)  Execute an intercompany loan such that Minor pays deductible interest to Parent. 
D)  Do all of these. 
E)  Do none of these.

Question 14

Match each of the following items with the appropriate description in applying the P.L. 86-272 definition of solicitation.
-Making a decision as to the creditworthiness of customers.

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 15

Your client, Hamlin Industries, wants to reduce its overall state/local income tax liability. Hamlin holds income- producing assets of various types, including tangible personal property, rental land and buildings, and high-yield stocks and bonds. You assess the asset portfolio and conclude that only the investment portfolio is "portable" and available for relocation at this time. What device might Hamlin use in a restructuring of its operations to achieve the desired
tax result? Be specific.

Accepted Answer

By relocating portfolio income into a pa

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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 18

Discuss how a multistate business divides its corporate taxable income among the states in which it operates. Hint:
use the terms allocation and apportionment in your comments.

Accepted Answer

Generally, business income is apportione

Question 19

State and local politicians tend to apply new and increased taxes to taxpayers who are nonresident visitors to the jurisdiction, such as a tax on auto rentals and hotel stays, because the taxpayer cannot vote to reelect or oust) the lawmaker.

Accepted Answer

A) True 
 B)False

Question 20

Garcia Corporation is subject to income tax in States G, H, and I. Garcia's compensation expense includes the following:
$$\begin{array} { l r r r r } 
& \text { State G } & \text { State H } & \text { State I } & \text { Total } \
\text { Salaries and wages for nonofficers } & \$ 600,000 & \$ 500,000 & \$ 500,000 & \$ 1,600,000 \
\text { Officers' salaries } & - 0 - & - 0 - & 800,000 & 800,000
\end{array}$$

Officers' salaries are included in the payroll factor for States G and H but not for I. Compute Garcia's payroll factors for G, H, and I.

Accepted Answer

G Payroll factor $600,000/$2,4

The typical local property tax falls on both an investor's principal residence and her stock portfolio.

A city might assess a recording tax when a business takes out a mortgage on its real estate.

Sylvia spends time working at the offices of her employer as a consultant to clients who are located in three different U.S. states. Sylvia's compensation is assigned to the payroll factors) of which states)? Apply the general UDITPA rules.

An)________ business operates in concert with its affiliated companies. As a result, the affiliates' data are included in the parent's apportionment computations.

P.L. 86-272________ does/does not) create income-tax nexus when the sales representative approves a sale at the customer's location.

The model law relating to the assignment of income among the states for corporations is:

Match each of the following items with the appropriate description in determining whether sales/use tax typically must be collected. -Prescription drugs and medicines purchased by a consumer.

The sales/use tax that is employed by most U.S. states does not fall on all retail transactions. Identify at least five sales/use tax exemptions that states often allow that eliminate certain transactions from the tax base.

Match each of the following terms with the appropriate description in the state income tax formula. Apply the UDITPA rules in your responses. -Dividend income from P & G stock held.

Under the UDITPA's_________ concept, sales are assumed to take place at the point of delivery as opposed to the location at which the shipment originates.

Parent and Minor form a non-unitary group of corporations. Parent is located in a state with an effective tax rate of 3% and Minor's effective tax rate is 9%. Acting in concert to reduce overall tax liabilities, the group should:

Match each of the following items with the appropriate description in applying the P.L. 86-272 definition of solicitation. -Making a decision as to the creditworthiness of customers.

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

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

Discuss how a multistate business divides its corporate taxable income among the states in which it operates. Hint: use the terms allocation and apportionment in your comments.

State and local politicians tend to apply new and increased taxes to taxpayers who are nonresident visitors to the jurisdiction, such as a tax on auto rentals and hotel stays, because the taxpayer cannot vote to reelect or oust) the lawmaker.

Understanding and Working With the Federal Tax Law

The Deduction for Qualified Business Income for Pass-Through Entities

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Earnings and Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, Operations, 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

The typical local property tax falls on both an investor's principal residence and her stock portfolio.

A city might assess a recording tax when a business takes out a mortgage on its real estate.

Sylvia spends time working at the offices of her employer as a consultant to clients who are located in three different U.S. states. Sylvia's compensation is assigned to the payroll factors) of which states)? Apply the general UDITPA rules.

An)________ business operates in concert with its affiliated companies. As a result, the affiliates' data are included in the parent's apportionment computations.

P.L. 86-272________ does/does not) create income-tax nexus when the sales representative approves a sale at the customer's location.

The model law relating to the assignment of income among the states for corporations is:

Match each of the following items with the appropriate description in determining whether sales/use tax typically must be collected. -Prescription drugs and medicines purchased by a consumer.

The sales/use tax that is employed by most U.S. states does not fall on all retail transactions. Identify at least five sales/use tax exemptions that states often allow that eliminate certain transactions from the tax base.

Match each of the following terms with the appropriate description in the state income tax formula. Apply the UDITPA rules in your responses. -Dividend income from P & G stock held.

Under the UDITPA's_________ concept, sales are assumed to take place at the point of delivery as opposed to the location at which the shipment originates.

Parent and Minor form a non-unitary group of corporations. Parent is located in a state with an effective tax rate of 3% and Minor's effective tax rate is 9%. Acting in concert to reduce overall tax liabilities, the group should:

Match each of the following items with the appropriate description in applying the P.L. 86-272 definition of solicitation. -Making a decision as to the creditworthiness of customers.

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

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

Discuss how a multistate business divides its corporate taxable income among the states in which it operates. Hint: use the terms allocation and apportionment in your comments.

State and local politicians tend to apply new and increased taxes to taxpayers who are nonresident visitors to the jurisdiction, such as a tax on auto rentals and hotel stays, because the taxpayer cannot vote to reelect or oust) the lawmaker.

Understanding and Working With the Federal Tax Law

The Deduction for Qualified Business Income for Pass-Through Entities

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Earnings and Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, Operations, 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