Exam 24: Multistate Corporate Taxation

Typically exempt from the sales/use tax base is the purchase of prescription medicines by an individual.

By making a water's edge election,the multinational taxpayer can limit the reach of the unitary theory to U.S.-based factors and income.

List which items are included in the payroll factor of a state.Consider all forms of compensation that an employee might receive.Apply the general UDITPA rules in answering this question.

S corporations must withhold taxes on the portions of the entity's income allocated to its shareholders.

Typically exempt from the sales/use tax base is the purchase of lumber by a do-it-yourself homeowner,when she builds a deck onto her patio.

When the taxpayer operates in one or more unitary states:

Pail Corporation is a merchandiser.It purchases overstock garments from various suppliers and sells the goods in its State L retail store.Determine the total sales that are subject to the L consumer sales tax.

The property factor includes assets that the taxpayer owns,but not those merely used under a lease agreement.

In determining taxable income for state income tax purposes,a Federal NOL deduction may constitute a(n)____________________ modification.

Only a few states have adopted an alternative minimum tax,similar to the Federal system.

Use tax would be due if an individual purchased an auto in State A and used it at his home in State B.

A state sales tax usually falls upon:

In a few states,a Federal S corporation is exempt from state corporate income tax only if ____________________ of its shareholders are state residents.

Net Corporation's sales office and manufacturing plant are located in State X.Net 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 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.Net incurred the following personnel costs. Net's payroll factor for State W is:

If a state follows Federal income tax rules,tax compliance and enforcement become easier to accomplish.

____________________ describe(s)the degree of business activity that must be present before a taxing jurisdiction has the right to impose a tax on an entity's income.

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

The sales/use tax that is employed by most U.S.states does not fall on all retail transactions.Identify at least five sales/use tax exemptions that states often allow,eliminating certain transactions from the tax base.

Under ____________________ a state is prohibited from taxing a business if the only connection with the state is the solicitation of orders for sales of tangible personal property that are sent outside the state for approval or rejection and,if approved,are filled and shipped by the business from a point outside of the state.

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: