Question 1

Typically exempt from the sales/use tax base is the purchase of tools by a manufacturer to make the widgets that it sells.

Accepted Answer

A) True 
 B)False  True

Question 2

Pail Corporation is a merchandiser. It purchases overstock garments from various suppliers and sells the goods in its State L retail store. Determine the total sales that are subject to the L consumer sales tax.

Accepted Answer

Pail must collect L sales tax on $900,000. No tax is collected from sales to charities, nor to other entities who will then re-sell the goods. The sales to M residents actually create an M use tax, as the goods presumably are worn by the customers in M. M residents should file a return to pay the M sales tax and then claim a credit for the payment actually made to L. Compliance with this cross-border result is very low. M might enforce this rule if its sales tax was applied at a higher rate than L's, perhaps only on big-ticket items like automobiles.

Question 3

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

Accepted Answer

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

Question 4

A state sales/use tax is designed to be collected by the ____________________ (seller/purchaser) of the product and then remitted to the state.

Accepted Answer

The answer of A state sales/use tax is designed to...

Question 5

A service engineer spends 60% of her time maintaining the employer's productive business property and 40% maintaining the employer's nonbusiness rental properties. This year, her compensation totaled $90,000. The payroll factor assigns $54,000 to the state in which the employer is based.

Accepted Answer

A) True 
 B)False

Question 6

Kim Corporation, a calendar year taxpayer, has manufacturing facilities in States A and
B. A summary of Kim's property holdings follows.
   
   *Unrelated to Kim's regular business and operations.
Determine Kim's property factors for the two states. A's statutes provide that the average historical cost of business property is to be included in the property factor. B's statutes provide that the property factor is based on the average depreciated basis of in-state business property.
Kim Corporation's property factor is 61.90% for State A, and its property factor for State B is 44.53%. Under the statutes of A and B, nonbusiness property (i.e., the rental property) is not taken into consideration in computing the property factor. The basis for determining the average property in A is historical cost, whereas the value employed for B is depreciated cost.
HISTORICAL COST-EXCLUDING NONBUSINESS PROPERTY

Accepted Answer

Average Property in A
 @#IMG-DLM& Averag

Question 7

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 8

Typically exempt from the sales/use tax base is the purchase of lumber by a do-it-yourself homeowner, when she builds a deck onto her patio.

Accepted Answer

A) True 
 B)False

Question 9

Giant Corporation owns all of the stock of Junior Corporation, a Delaware passive investment company. Giant operates strictly in nonunitary State B, which levies a 9% income tax. This year, Junior earned $200,000 of portfolio interest income and paid a $150,000 dividend to Giant. In which state(s) will the interest income create an income tax liability?

Accepted Answer

A)  In neither state. 
B)  Only in Delaware. 
C)  Only in B. 
D)  In both B and Delaware, according to the apportionment formulas of each. 
A)  In neither state. 
B)  Only in Delaware. 
C)  Only in B. 
D)  In both B and Delaware, according to the apportionment formulas of each.

Question 10

A state wants to increase its income tax collections, but politically it would be unwise to raise taxes on in-state individuals or businesses. Identify some changes to the income tax apportionment formula that would shift the scheduled income tax increases to out-of-state businesses.

Accepted Answer

The answer of A state wants to increase its income...

Question 11

A typical state taxable income addition modification is the interest income from U.S. Treasury bonds.

Accepted Answer

A) True 
 B)False

Question 12

All of the U.S. states use the same apportionment formula and factors.

Accepted Answer

A) True 
 B)False

Question 13

A taxpayer has nexus with a state for sales and use tax purposes if it has a physical presence in the state.

Accepted Answer

A) True 
 B)False

Question 14

Mercy Corporation, headquartered in F, sells wireless computer devices, including keyboards and bar code readers. Mercy's degree of operations is sufficient to establish nexus only in E and
F. Determine its sales factor in those states.
State E applies a throwback rule to sales, while State F does not. State G has not adopted an income tax to date. Mercy reported the following sales for the year. All of the goods were shipped from Mercy's F manufacturing facilities.

Accepted Answer

Because F has not adopted a throwback ru

Question 15

Roughly forty 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 16

Compost Corporation has finished its computation of Federal taxable income. In State Q, the derivation of state corporate taxable income starts with the Federal amount and makes a number of modifications. List at least five such modifications that Compost is likely to encounter.

Accepted Answer

State income tax modifications

Question 17

A taxpayer wishing to reduce the negative tax effects of the application of the unitary theory might:

Accepted Answer

A)  Affiliate with a service division that shows an operating loss, like one in research and development. 
B)  Acquire a unitary affiliate in a country with a high wage structure. 
C)  Add a profitable entity to the unitary group. 
D)  a. and b. 
A)  Affiliate with a service division that shows an operating loss, like one in research and development. 
B)  Acquire a unitary affiliate in a country with a high wage structure. 
C)  Add a profitable entity to the unitary group. 
D)  a. and b.

Question 18

The ____________________ tax usually is applied at the city or county level, as its main source of revenue.

Accepted Answer

The answer of The ____________________ tax usually is applied at...

Question 19

Garcia Corporation is subject to tax in States G, H, and I. Garcia's compensation expense includes the following.
   Officers' salaries are included in the payroll factor for G and H, but not for I. Compute Garcia's payroll factors for G, H, and I.

Accepted Answer

The answer of Garcia Corporation is subject to tax in...

Question 20

If a state follows Federal income tax rules, the state's tax compliance and enforcement become easier to accomplish.

Accepted Answer

A) True 
 B)False

Typically exempt from the sales/use tax base is the purchase of tools by a manufacturer to make the widgets that it sells.

Pail Corporation is a merchandiser. It purchases overstock garments from various suppliers and sells the goods in its State L retail store. Determine the total sales that are subject to the L consumer sales tax.

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

A state sales/use tax is designed to be collected by the ____________________ (seller/purchaser) of the product and then remitted to the state.

A service engineer spends 60% of her time maintaining the employer's productive business property and 40% maintaining the employer's nonbusiness rental properties. This year, her compensation totaled $90,000. The payroll factor assigns $54,000 to the state in which the employer is based.

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.

Typically exempt from the sales/use tax base is the purchase of lumber by a do-it-yourself homeowner, when she builds a deck onto her patio.

A state wants to increase its income tax collections, but politically it would be unwise to raise taxes on in-state individuals or businesses. Identify some changes to the income tax apportionment formula that would shift the scheduled income tax increases to out-of-state businesses.

A typical state taxable income addition modification is the interest income from U.S. Treasury bonds.

All of the U.S. states use the same apportionment formula and factors.

A taxpayer has nexus with a state for sales and use tax purposes if it has a physical presence in the state.

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

Compost Corporation has finished its computation of Federal taxable income. In State Q, the derivation of state corporate taxable income starts with the Federal amount and makes a number of modifications. List at least five such modifications that Compost is likely to encounter.

A taxpayer wishing to reduce the negative tax effects of the application of the unitary theory might:

The ____________________ tax usually is applied at the city or county level, as its main source of revenue.

Garcia Corporation is subject to tax in States G, H, and I. Garcia's compensation expense includes the following. Officers' salaries are included in the payroll factor for G and H, but not for I. Compute Garcia's payroll factors for G, H, and I.

If a state follows Federal income tax rules, the state's tax compliance and enforcement become easier to accomplish.

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 of tools by a manufacturer to make the widgets that it sells.

Pail Corporation is a merchandiser. It purchases overstock garments from various suppliers and sells the goods in its State L retail store. Determine the total sales that are subject to the L consumer sales tax.

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

A state sales/use tax is designed to be collected by the ____________________ (seller/purchaser) of the product and then remitted to the state.

A service engineer spends 60% of her time maintaining the employer's productive business property and 40% maintaining the employer's nonbusiness rental properties. This year, her compensation totaled $90,000. The payroll factor assigns $54,000 to the state in which the employer is based.

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.

Typically exempt from the sales/use tax base is the purchase of lumber by a do-it-yourself homeowner, when she builds a deck onto her patio.

A state wants to increase its income tax collections, but politically it would be unwise to raise taxes on in-state individuals or businesses. Identify some changes to the income tax apportionment formula that would shift the scheduled income tax increases to out-of-state businesses.

A typical state taxable income addition modification is the interest income from U.S. Treasury bonds.

All of the U.S. states use the same apportionment formula and factors.

A taxpayer has nexus with a state for sales and use tax purposes if it has a physical presence in the state.

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

Compost Corporation has finished its computation of Federal taxable income. In State Q, the derivation of state corporate taxable income starts with the Federal amount and makes a number of modifications. List at least five such modifications that Compost is likely to encounter.

A taxpayer wishing to reduce the negative tax effects of the application of the unitary theory might:

The ____________________ tax usually is applied at the city or county level, as its main source of revenue.

Garcia Corporation is subject to tax in States G, H, and I. Garcia's compensation expense includes the following. Officers' salaries are included in the payroll factor for G and H, but not for I. Compute Garcia's payroll factors for G, H, and I.

If a state follows Federal income tax rules, the state's tax compliance and enforcement become easier to accomplish.

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