Question 1

The sale of groceries to an individual probably is exempt from sales/use tax under the _________________________ rule.

Accepted Answer

The answer of The sale of groceries to an individual...

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

The individual seller of a used auto should collect and remit sales tax to the state.

Accepted Answer

A) True 
 B)False

Question 4

Typically, a sales/use tax is applied to a retail sale of ____________________ property.

Accepted Answer

The answer of Typically, a sales/use tax is applied to...

Question 5

In determining taxable income for state income tax purposes, the state NOL deduction typically constitutes a(n) ____________________ modification.

Accepted Answer

The answer of In determining taxable income for state income...

Question 6

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 7

A typical state taxable income addition modification is for the Federal income tax paid for the period.

Accepted Answer

A) True 
 B)False

Question 8

An assembly worker earns a $30,000 salary and receives a fringe benefit package worth $15,000.The payroll factor assigns $30,000 for this employee.

Accepted Answer

A) True 
 B)False

Question 9

Hermann Corporation is based in State A (corporate income tax rate 10%).It sells its goods to customers in both A and State B (corporate income tax rate 4%). Hermann's state taxable income for the year is $1 million, 30% of which relates to B customers. Hermann's level of activities in B is insufficient to create nexus there, but A has adopted a throwback rule as to multistate sales. Would Hermann reduce its total state income tax liability by creating nexus with B, say by allowing its sales force to make credit decisions? Elaborate.

Accepted Answer

Creating nexus with

Question 10

In conducting multistate tax planning, the taxpayer should:

Accepted Answer

A) Review tax opportunities in light of their effect on the overall business. 
B) Exploit inconsistencies among the taxing statutes and formulas of the states. 
C) Consider the tax effects of the plan after accounting for any new compliance and administrative costs that it generates. 
D) All of the above are true. 
A) Review tax opportunities in light of their effect on the overall business. 
B) Exploit inconsistencies among the taxing statutes and formulas of the states. 
C) Consider the tax effects of the plan after accounting for any new compliance and administrative costs that it generates. 
D) All of the above are true.

Question 11

A(n) ____________________ business operates its separate companies as a whole.It cannot be segregated into independently operating divisions or branches.

Accepted Answer

The answer of A(n) ____________________ business operates its separate companies...

Question 12

Match each of the following events 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.

Accepted Answer

The answer of Match each of the following events to...

Question 13

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.

Question 14

Almost all of the states assess some form of consumer-level sales/use tax.

Accepted Answer

A) True 
 B)False

Question 15

Typical indicators of nexus include the presence of employees based in the state, and the ownership or lease of realty there.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) Execute an intercompany loan, such that Junior pays deductible interest to Parent. 
B) Have Parent charge Junior an annual management fee. 
C) Shift Parent's high-cost assembly and distribution operations to Junior. 
D) All of the above are effective income-shifting techniques for a unitary group. 
E) None of the above is an effective income-shifting technique for a unitary group. 
A) Execute an intercompany loan, such that Junior pays deductible interest to Parent. 
B) Have Parent charge Junior an annual management fee. 
C) Shift Parent's high-cost assembly and distribution operations to Junior. 
D) All of the above are effective income-shifting techniques for a unitary group. 
E) None of the above is an effective income-shifting technique for a unitary group.

Question 17

The property factor includes business assets that the taxpayer owns, but also those merely used under a lease agreement.

Accepted Answer

A) True 
 B)False

Question 18

Almost all of the states allow ____________________ treatment to an LLC for income tax purposes.
or
or

Accepted Answer

flow-throu

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

José Corporation realized $600,000 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) $79,800. 
B) $300,000. 
C) $520,200. 
D) $600,000. 
A) $79,800. 
B) $300,000. 
C) $520,200. 
D) $600,000.

Exam 24: Multistate Corporate Taxation

The sale of groceries to an individual probably is exempt from sales/use tax under the _________________________ rule.

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

The individual seller of a used auto should collect and remit sales tax to the state.

Typically, a sales/use tax is applied to a retail sale of ____________________ property.

In determining taxable income for state income tax purposes, the state NOL deduction typically constitutes a(n) ____________________ modification.

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

A typical state taxable income addition modification is for the Federal income tax paid for the period.

An assembly worker earns a $30,000 salary and receives a fringe benefit package worth $15,000.The payroll factor assigns $30,000 for this employee.

In conducting multistate tax planning, the taxpayer should:

A(n) ____________________ business operates its separate companies as a whole.It cannot be segregated into independently operating divisions or branches.

Match each of the following events 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.

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

Almost all of the states assess some form of consumer-level sales/use tax.

Typical indicators of nexus include the presence of employees based in the state, and the ownership or lease of realty there.

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

The property factor includes business assets that the taxpayer owns, but also those merely used under a lease agreement.

Almost all of the states allow ____________________ treatment to an LLC for income tax purposes. or or

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

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

A: Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S: Corporations

Exempt Entities

Taxation of International Transactions

Tax Practice and Ethics

Income Taxation of Trusts and Estates

Filters