Question 1

Typically exempt from 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.

Accepted Answer

A) True 
 B)False

Question 2

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 3

In computing the property factor,property owned by the corporation typically is valued at its ____________________,plus the cost of additions and improvements,but without adjusting for ____________________.

Accepted Answer

original cost,deprec

Question 4

Double weighting the sales factor effectively increases the tax burden on taxpayers based in the state,such as corporations with in-state headquarters.

Accepted Answer

A) True 
 B)False

Question 5

A ____________________ tax is designed to complement the local sales tax structure.

Accepted Answer

The answer of A ____________________ tax is designed to complement...

Question 6

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 $90,000 to the state in which the employer is based.

Accepted Answer

A) True 
 B)False

Question 7

Nonbusiness income includes rentals of investment property.

Accepted Answer

A) True 
 B)False

Question 8

Typically exempt from the sales/use tax base is the purchase by a church of printed music for its choir.

Accepted Answer

A) True 
 B)False

Question 9

Mandy Corporation realized $1,000,000 taxable income from the sales of its products in States X and Z.Mandy's activities establish nexus for income tax purposes only in Z.Mandy's sales,payroll,and property among the states include the following.   X utilizes a double-weighted sales factor in its three-factor apportionment formula.How much of Mandy's taxable income is apportioned to X?

Accepted Answer

A) $1,000,000. 
B) $543,333. 
C) $490,000. 
D) $0. 
A) $1,000,000. 
B) $543,333. 
C) $490,000. 
D) $0.

Question 10

The property factor includes real property and construction in progress.

Accepted Answer

A) True 
 B)False

Question 11

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 12

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

Accepted Answer

A) Inspection by a sales employee of the customer's inventory for specific product lines. 
B) Using an independent contractor who acts as a manufacturer's representative for the taxpayer through a sales office in the state. 
C) Executing a sales campaign,using an advertising agency acting as an independent contractor for the taxpayer. 
D) Maintenance of inventory in the state by an independent contractor under a consignment plan. 
A) Inspection by a sales employee of the customer's inventory for specific product lines. 
B) Using an independent contractor who acts as a manufacturer's representative for the taxpayer through a sales office in the state. 
C) Executing a sales campaign,using an advertising agency acting as an independent contractor for the taxpayer. 
D) Maintenance of inventory in the state by an independent contractor under a consignment plan.

Question 13

You are completing the State A income tax return for Quaint Company.Quaint is a limited liability company,and it operates in various states,showing the following results.
   In A,all interest is treated as business income.A uses a sales-only apportionment factor.Assuming the following data are correct,compute Quaint's A taxable income.

Accepted Answer

LLCs allocate and apportion state taxabl

Question 14

Trayne Corporation's sales office and manufacturing plant are located in State X.Trayne also maintains a manufacturing plant and sales office in State W.For purposes of apportionment,X defines payroll as all compensation paid to employees,including elective contributions to § 401(k)deferred compensation plans.Under the statutes of W,neither compensation paid to officers nor contributions to § 401(k)plans are included in the payroll factor.Trayne incurred the following personnel costs.   Trayne's payroll factor for State X is:

Accepted Answer

A) 100.00%. 
B) 80.00%. 
C) 73.68%. 
D) 71.43%. 
E) 50.00%. 
A) 100.00%. 
B) 80.00%. 
C) 73.68%. 
D) 71.43%. 
E) 50.00%.

Question 15

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 as...

Question 16

A typical state taxable income addition modification is the income tax paid to the state for the year.

Accepted Answer

A) True 
 B)False

Question 17

A few states recognize an entity's S corporation status,such that taxable income flows through directly to shareholders,but they also assess a state-level tax on the entity.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Polly is an employee of a consulting firm.She spends time working in three different U.S.states.To which state(s)' payroll factor(s)is her compensation assigned? Apply the general UDITPA rules in answering this question.

Accepted Answer

The compensation of an employee generall

Question 20

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 marketing. 
B) Disengage unitary operations with the most profitable affiliates. 
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 marketing. 
B) Disengage unitary operations with the most profitable affiliates. 
C) Add a profitable entity to the unitary group. 
D) a.and b.

Exam 24: Multistate Corporate Taxation

Typically exempt from 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.

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.

In computing the property factor,property owned by the corporation typically is valued at its ____________________,plus the cost of additions and improvements,but without adjusting for ____________________.

Double weighting the sales factor effectively increases the tax burden on taxpayers based in the state,such as corporations with in-state headquarters.

A ____________________ tax is designed to complement the local sales tax structure.

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 $90,000 to the state in which the employer is based.

Nonbusiness income includes rentals of investment property.

Typically exempt from the sales/use tax base is the purchase by a church of printed music for its choir.

The property factor includes real property and construction in progress.

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:

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

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

A typical state taxable income addition modification is the income tax paid to the state for the year.

A few states recognize an entity's S corporation status,such that taxable income flows through directly to shareholders,but they also assess a state-level tax on the entity.

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

Polly is an employee of a consulting firm.She spends time working in three different U.S.states.To which state(s)' payroll factor(s)is her compensation assigned? Apply the general UDITPA rules in answering this question.

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

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

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

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

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

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S Corporations

Exempt Entities

Taxation of International Transactions

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters

In computing the property factor,property owned by the corporation typically is valued at its ,plus the cost of additions and improvements,but without adjusting for .