Exam 24: Multistate Corporate Taxation

Apportionment is a means by which a corporation's _________________________ income is divided among the states in which it conducts business.

Leased property, when included in the property factor, usually is valued at ____________________ times its annual rental, even though the taxpayer does not own the asset. or

In the apportionment formula, most states assign more than a one-third weight to the ____________________ factor.

A use tax applies when a State A resident purchases:

Overall tax liabilities typically ____________________ (increase/decrease) if the members of a unitary group begin to include affiliates that generate net operating losses.

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

Kurt Corporation realized $900,000 taxable income from the sales of its products in States X and Z.Kurt's activities establish nexus for income tax purposes in both states.Kurt's sales, payroll, and property among the states include the following. Z utilizes an equally weighted three-factor apportionment formula.Kurt is incorporated in X.How much of Kurt's taxable income is apportioned to Z?

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.

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

All of the U.S.states have adopted a tax based on net taxable income.

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.

A state can levy an income tax on a business only if the business was incorporated in the state.

General Corporation is taxable in a number of states. This year, General made a $100,000 sale from its A headquarters to a customer in B. This activity is not sufficient for General to create nexus with B. State B applies a throwback rule, but State A does not. In which state(s) will the sale be included in the sales factor numerator?

Most states waive the collection of sales tax on medical equipment.

Usually a business chooses a location where it will build a new plant based chiefly on tax considerations.

S corporations flow-through income amounts to its shareholders, and most states require a withholding of shareholder taxes on the allocated amounts.

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. Z utilizes a double-weighted sales factor in its three-factor apportionment formula.How much of José's taxable income is apportioned to Z?

Parent and Junior form a non-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:

Several states allow the S corporation to file a(n) ____________________ income tax return, usually in the form of a state-by-state spreadsheet, on behalf of its out-of-state shareholders. or

Dott Corporation generated $300,000 of state taxable income from selling its mapping software in States A and B.Both states utilize a three-factor apportionment formula which equally weights sales, property, and payroll.The rates of corporate income tax imposed in A and B are 7% and 10%, respectively.Determine Dott's state income tax liability. B.For the taxable year, the corporation's activities within the two states were as follows. Dott has determined that it is subject to tax in both A and