Exam 24: Multistate Corporate Taxation

By making a water's edge election, the multinational taxpayer can limit the reach of unitary principles to the apportionment factors and income of its U.S.and E.U.affiliates.

Britta Corporation's entire operations are located in State A. Eighty percent ($800,000) of Britta's sales are made in A and the remaining sales ($200,000) are made in State B. B has not adopted a corporate income tax. If A has adopted a throwback rule, the numerator of Britta's A sales factor is:

Typically included in the sales/use tax base is the purchase of computer and cell phone equipment by a large consulting firm that is incorporated in the state.

Allocation is a method under which a corporation's _________________________ income is directly assigned to the specific states where the income is derived.

Garcia Corporation is subject to tax in States G, H, and I.Garcia's compensation expense includes the following.

Flint Corporation is subject to a corporate income tax only in State X.The starting point in computing X taxable income is Federal taxable income.Flint's Federal taxable income is $750,000, which includes a $50,000 deduction for state income taxes.During the year, Flint received $10,000 interest on Federal obligations.X tax law does not allow a deduction for state income tax payments. Flint's taxable income for X purposes is:

Politicians frequently use tax credits and exemptions to create economic development incentives.

In determining a corporation's taxable income for state income tax purposes, which of the following does not constitute a subtraction from Federal income?

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

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.

Under P.L.86-272, the taxpayer is exempt from state taxes on income resulting from the mere solicitation of orders for the sale of stocks and bonds.

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

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

Condor Corporation generated $450,000 of state taxable income from selling its product in States A and B.Both states utilize a three-factor apportionment formula that equally weights sales, property, and payroll.The rates of corporate income tax imposed in A and B are 5% and 3%, respectively.Determine Condor's state income tax liability. B.For the taxable year, the corporation's activities within the two states were as follows. Condor has determined that it is subject to tax in both A and

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.

All of the U.S.states use an apportionment formula based on the sales, property, and payroll factors.

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 A applies a throwback rule, but State B does not. In which state(s) will the sale be included in the sales factor numerator?

Given the following transactions for the year, determine Comp Corporation's D payroll factor denominator.State D has adopted the principles of UDITPA.

Under P.L.86-272, which of the following transactions by itself would create nexus with a state?

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