Question 1

All states employ some combination of sales and use tax, income or franchise tax, or property tax to fund their government operations.

Accepted Answer

A) True 
 B)False

Question 2

A state's apportionment formula divides nonbusiness income among the states where income tax nexus exists.

Accepted Answer

A) True 
 B)False

Question 3

Use tax liability accrues in the state where purchased property will be used when the seller of the property is not required to collect sales tax.

Accepted Answer

A) True 
 B)False

Question 4

In which of the following state cases did the state not assert economic nexus?

Accepted Answer

A)  New York with the Amazon rule. 
B)  South Carolina in the Geoffrey case. 
C)  West Virginia in the MBNA case. 
D)  Wisconsin in Wrigley. 
A)  New York with the Amazon rule. 
B)  South Carolina in the Geoffrey case. 
C)  West Virginia in the MBNA case. 
D)  Wisconsin in Wrigley.

Question 5

Tennis Pro has the following sales, payroll and property factors:
   What would Tennis Pro's Virginia and Maryland apportionment factors be if Virginia used a double-weighted sales four factor method and Maryland used a single-factor sales formula?

Accepted Answer

60 percent and 20 pe

Question 6

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis Pro has property as follows:
   What is Tennis Pro's Virginia property numerator and property factor?

Accepted Answer

$1,385,179 and 87.47 percent.

Question 7

Roxy operates a dress shop in Arlington, Virginia. Lisa, a Maryland resident, comes in for a measurement and purchases a $1,500 dress that is shipped to her Maryland residence using a common carrier. Assuming that Virginia's sales tax rate is 5 percent and that Maryland's sales tax rate is 7 percent, what is Roxy's sales and use tax liability?

Accepted Answer

A)  $0. 
B)  $75 to Virginia. 
C)  $75 sales tax to Virginia and $15 use tax to Maryland. 
D)  $90 to Maryland. 
A)  $0. 
B)  $75 to Virginia. 
C)  $75 sales tax to Virginia and $15 use tax to Maryland. 
D)  $90 to Maryland.

Question 8

Bethesda Corporation is unprotected from income tax by Public Law 86-272. Which of the following characteristics creates a problem for Bethesda in states other than Maryland?

Accepted Answer

A)  Bethesda does business in Maryland and five other states. 
B)  Bethesda sells copier equipment and copy center services. 
C)  All orders are approved in Maryland. 
D)  All in-state services are limited to solicitation in states other than Maryland. 
A)  Bethesda does business in Maryland and five other states. 
B)  Bethesda sells copier equipment and copy center services. 
C)  All orders are approved in Maryland. 
D)  All in-state services are limited to solicitation in states other than Maryland.

Question 9

What was the Supreme Court's holding in Quill?

Accepted Answer

A)  An out-of-state mail-order company did not have a sales tax collection responsibility because it lacked physical presence. 
B)  Reaffirmed that an out-of-state business must have physical presence in the state before the state may require the business to collect sales tax from in-state customers. 
C)  Spelled out four criteria for determining whether states may subject nondomiciliary companies to an income tax. 
D)  Defined solicitation for purposes of Public Law 86-272. 
A)  An out-of-state mail-order company did not have a sales tax collection responsibility because it lacked physical presence. 
B)  Reaffirmed that an out-of-state business must have physical presence in the state before the state may require the business to collect sales tax from in-state customers. 
C)  Spelled out four criteria for determining whether states may subject nondomiciliary companies to an income tax. 
D)  Defined solicitation for purposes of Public Law 86-272.

Question 10

What was the Supreme Court's holding in National Bellas Hess?

Accepted Answer

A)  An out-of-state mail-order company did not have a sales tax collection responsibility because it lacked physical presence. 
B)  Reaffirmed that an out-of-state business must have physical presence in the state before the state may require the business to collect sales tax from in-state customers. 
C)  Spelled out four criteria for determining whether states may subject nondomiciliary companies to an income tax. 
D)  Defined solicitation for purposes of Public Law 86-272. 
A)  An out-of-state mail-order company did not have a sales tax collection responsibility because it lacked physical presence. 
B)  Reaffirmed that an out-of-state business must have physical presence in the state before the state may require the business to collect sales tax from in-state customers. 
C)  Spelled out four criteria for determining whether states may subject nondomiciliary companies to an income tax. 
D)  Defined solicitation for purposes of Public Law 86-272.

Question 11

Which of the following is not a general rule for calculating the property factor?

Accepted Answer

A)  Uses the average property values for the year. 
B)  Values property at historical cost. 
C)  Excludes property in transit from the calculation. 
D)  Includes rented property at eight times the annual rent. 
A)  Uses the average property values for the year. 
B)  Values property at historical cost. 
C)  Excludes property in transit from the calculation. 
D)  Includes rented property at eight times the annual rent.

Question 12

Tennis Pro is headquartered in Virginia. Assume it has a state income tax base of $200,000. Of this amount, $60,000 was non-business income. Assume that Tennis Pro's Virginia apportionment factor is 73.28 percent. The non-business income allocated to Virginia was $23,000. Assuming a Virginia corporate tax rate of 5.5 percent, what is Tennis Pro's Virginia state tax liability? (Round your answer to the nearest whole number.)

Accepted Answer

$6,908.
$200,000 (state tax base) − $60,

Question 13

Public Law 86-272 was a congressional response to Northwestern States Portland Cement.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not a general rule for calculating the payroll factor?

Accepted Answer

A)  Includes salaries, commissions, and bonuses. 
B)  Excludes compensation to independent contractors. 
C)  Allocates compensation for employees working in more than one state. 
D)  Assigns the payroll of each employee to a single state. 
A)  Includes salaries, commissions, and bonuses. 
B)  Excludes compensation to independent contractors. 
C)  Allocates compensation for employees working in more than one state. 
D)  Assigns the payroll of each employee to a single state.

Question 15

The Wrigley case held that the sale of intangibles is protected by Public Law 86-272.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not a general rule for allocating nonbusiness income?

Accepted Answer

A)  Interest and dividends to the state of commercial domicile. 
B)  Rental income for investment property to state of commercial domicile. 
C)  Rental income for business property to state where property is located. 
D)  Capital gains from rental property to state where property is located. 
A)  Interest and dividends to the state of commercial domicile. 
B)  Rental income for investment property to state of commercial domicile. 
C)  Rental income for business property to state where property is located. 
D)  Capital gains from rental property to state where property is located.

Question 17

The Mobil decision identified three factors to determine whether a group of companies are unitary.

Accepted Answer

A) True 
 B)False

All states employ some combination of sales and use tax, income or franchise tax, or property tax to fund their government operations.

A state's apportionment formula divides nonbusiness income among the states where income tax nexus exists.

Use tax liability accrues in the state where purchased property will be used when the seller of the property is not required to collect sales tax.

In which of the following state cases did the state not assert economic nexus?

Tennis Pro has the following sales, payroll and property factors: What would Tennis Pro's Virginia and Maryland apportionment factors be if Virginia used a double-weighted sales four factor method and Maryland used a single-factor sales formula?

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis Pro has property as follows: What is Tennis Pro's Virginia property numerator and property factor?

Bethesda Corporation is unprotected from income tax by Public Law 86-272. Which of the following characteristics creates a problem for Bethesda in states other than Maryland?

What was the Supreme Court's holding in Quill?

What was the Supreme Court's holding in National Bellas Hess?

Which of the following is not a general rule for calculating the property factor?

Public Law 86-272 was a congressional response to Northwestern States Portland Cement.

Which of the following is not a general rule for calculating the payroll factor?

The Wrigley case held that the sale of intangibles is protected by Public Law 86-272.

Which of the following is not a general rule for allocating nonbusiness income?

The Mobil decision identified three factors to determine whether a group of companies are unitary.

An Introduction to Tax

Tax Compliance, the IRS, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Exam 23: State and Local Taxes

All states employ some combination of sales and use tax, income or franchise tax, or property tax to fund their government operations.

A state's apportionment formula divides nonbusiness income among the states where income tax nexus exists.

Use tax liability accrues in the state where purchased property will be used when the seller of the property is not required to collect sales tax.

In which of the following state cases did the state not assert economic nexus?

Tennis Pro has the following sales, payroll and property factors: What would Tennis Pro's Virginia and Maryland apportionment factors be if Virginia used a double-weighted sales four factor method and Maryland used a single-factor sales formula?

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis Pro has property as follows: What is Tennis Pro's Virginia property numerator and property factor?

Bethesda Corporation is unprotected from income tax by Public Law 86-272. Which of the following characteristics creates a problem for Bethesda in states other than Maryland?

What was the Supreme Court's holding in Quill?

What was the Supreme Court's holding in National Bellas Hess?

Which of the following is not a general rule for calculating the property factor?

Public Law 86-272 was a congressional response to Northwestern States Portland Cement.

Which of the following is not a general rule for calculating the payroll factor?

The Wrigley case held that the sale of intangibles is protected by Public Law 86-272.

Which of the following is not a general rule for allocating nonbusiness income?

The Mobil decision identified three factors to determine whether a group of companies are unitary.

An Introduction to Tax

Tax Compliance, the IRS, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters