Question 1

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 2

The sale of a used auto probably is exempt from sales/use tax under the _________________________ rule.

Accepted Answer

The answer of The sale of a used auto probably...

Question 3

A use tax:

Accepted Answer

A) Applies when a State A resident purchases a new automobile from a State A dealership. 
B) Applies when a State A resident purchases a new automobile from a State B dealership,then driving the car home. 
C) Applies when a State A resident purchases groceries from a neighborhood store. 
D) Applies when a State A resident purchases hardware from sears.com rather than at the Best Buy store at the local mall. 
A) Applies when a State A resident purchases a new automobile from a State A dealership. 
B) Applies when a State A resident purchases a new automobile from a State B dealership,then driving the car home. 
C) Applies when a State A resident purchases groceries from a neighborhood store. 
D) Applies when a State A resident purchases hardware from sears.com rather than at the Best Buy store at the local mall.

Question 4

State and local politicians tend to apply new and increased taxes to taxpayers who are visitors to the jurisdiction and cannot vote to reelect the lawmaker.

Accepted Answer

A) True 
 B)False

Question 5

Indicate for each transaction whether a sales (S)or use (U)applies,or whether the transaction is nontaxable (N).Where the laws vary among various states,assume that the most common rules apply.All taxpayers are individuals.

Accepted Answer

The answer of Indicate for each transaction whether a sales...

Question 6

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

Accepted Answer

The answer of In the apportionment formula,most states assign more...

Question 7

State A applies a throwback rule.General Corporation is taxable in a number of states.This year,General made a $100,000 sale from its A headquarters to an agency of the U.S.government.In which state(s)will the sale be included in the sales factor?

Accepted Answer

A) All in A. 
B) In none of the states,under the doctrine of indeterminate destination. 
C) In all of the states,according to the apportionment formulas of each,as the U.S.government is present in all states. 
D) One-half in A,with the balance exempted from other states' sales factors under the Colgate doctrine. 
A) All in A. 
B) In none of the states,under the doctrine of indeterminate destination. 
C) In all of the states,according to the apportionment formulas of each,as the U.S.government is present in all states. 
D) One-half in A,with the balance exempted from other states' sales factors under the Colgate doctrine.

Question 8

____________________ is a method under which specific components of a corporation's income are directly assigned to a specific state.

Accepted Answer

The answer of ____________________ is a method under which specific...

Question 9

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 10

In most states,a limited liability company (LLC)is subject to the state income tax:

Accepted Answer

A) As though it were a C corporation. 
B) As though it were a business trust. 
C) As a flow-through entity,similar to its Federal income tax treatment. 
D) LLCs typically are exempted from state income taxation. 
A) As though it were a C corporation. 
B) As though it were a business trust. 
C) As a flow-through entity,similar to its Federal income tax treatment. 
D) LLCs typically are exempted from state income taxation.

Question 11

Judy,a regional sales manager,has her office in State X.Her region includes several states,as indicated in the sales report below.Determine how much of Judy's $200,000 compensation is assigned to the payroll factor of State X.

Accepted Answer

A) $0. 
B) $50,000. 
C) $60,000. 
D) $80,000. 
E) $200,000. 
A) $0. 
B) $50,000. 
C) $60,000. 
D) $80,000. 
E) $200,000.

Question 12

The typical state sales/use tax falls on sales of both products and services.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) Interest on U.S.obligations. 
B) Expenses that are directly or indirectly related to state and municipal interest that is taxable for state purposes. 
C) The amount by which the Federal deduction for depreciation exceeds the depreciation deduction permitted for state tax purposes. 
D) The amount by which the state loss from the disposal of assets exceeds the Federal loss from such disposal. 
A) Interest on U.S.obligations. 
B) Expenses that are directly or indirectly related to state and municipal interest that is taxable for state purposes. 
C) The amount by which the Federal deduction for depreciation exceeds the depreciation deduction permitted for state tax purposes. 
D) The amount by which the state loss from the disposal of assets exceeds the Federal loss from such disposal.

Question 15

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 16

Wailes Corporation is subject to a corporate income tax only in State X.The starting point in computing X taxable income is Federal taxable income.Wailes' Federal taxable income is $750,000,which includes a $75,000 deduction for state income taxes.During the year,Wailes received $20,000 interest on Federal obligations.X tax law does not allow a deduction for state income tax payments. Wailes' taxable income for X purposes is:

Accepted Answer

A) $825,000. 
B) $805,000. 
C) $750,000. 
D) $680,000. 
A) $825,000. 
B) $805,000. 
C) $750,000. 
D) $680,000.

Question 17

A state or local tax on a corporation's income might be called a franchise tax or a business privilege tax.

Accepted Answer

A) True 
 B)False

Question 18

List some of the most commonly encountered state income tax modifications,used in computing state taxable income.

Accepted Answer

State income tax modifications

Question 19

In most states,a taxpayer's income is apportioned on the basis of a formula measuring the extent of business contact,and allocated according to the location of property owned or used.

Accepted Answer

A) True 
 B)False

Question 20

Identify some state/local income tax issues facing pass-through entities such as S corporations,partnerships,and LLCs.

Accepted Answer

The answer of Identify some state/local income tax issues facing...

Exam 24: Multistate Corporate Taxation

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

The sale of a used auto probably is exempt from sales/use tax under the _________________________ rule.

A use tax:

State and local politicians tend to apply new and increased taxes to taxpayers who are visitors to the jurisdiction and cannot vote to reelect the lawmaker.

Indicate for each transaction whether a sales (S)or use (U)applies,or whether the transaction is nontaxable (N).Where the laws vary among various states,assume that the most common rules apply.All taxpayers are individuals.

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

State A applies a throwback rule.General Corporation is taxable in a number of states.This year,General made a $100,000 sale from its A headquarters to an agency of the U.S.government.In which state(s)will the sale be included in the sales factor?

____________________ is a method under which specific components of a corporation's income are directly assigned to a specific state.

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

In most states,a limited liability company (LLC)is subject to the state income tax:

Judy,a regional sales manager,has her office in State X.Her region includes several states,as indicated in the sales report below.Determine how much of Judy's $200,000 compensation is assigned to the payroll factor of State X.

The typical state sales/use tax falls on sales of both products and services.

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

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

A state or local tax on a corporation's income might be called a franchise tax or a business privilege tax.

List some of the most commonly encountered state income tax modifications,used in computing state taxable income.

In most states,a taxpayer's income is apportioned on the basis of a formula measuring the extent of business contact,and allocated according to the location of property owned or used.

Identify some state/local income tax issues facing pass-through entities such as S corporations,partnerships,and LLCs.

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