Question 1

In most states, medical services are exempt from the sales/use tax base.

Accepted Answer

A) True 
 B)False  True

Question 2

Slattery Corporation sells widgets in two states. State A levies a 9% effective tax rate, and State B levies a 4% rate. A and B have adopted sales-factor-only apportionment formulas. To reduce overall multistate income tax liabilities, Slattery should:

Accepted Answer

A)   Remove all stored inventory from A.
B)   Establish a personal training center in A.
C)   Move its home office from B to A.
D)   Convert to employee status the independent contractors that it uses to sell widgets in A. A

Question 3

In determining taxable income for state income tax purposes, the state NOL deduction typically constitutes a(n) ____________________ modification.

Accepted Answer

subtraction

Question 4

Your supervisor has shifted your responsibilities from the Federal corporate income tax to a multistate corporate income tax practice. In what areas might your Federal income tax knowledge also be applicable in your new assignment?

Accepted Answer

The answer of Your supervisor has shifted your responsibilities from...

Question 5

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

Accepted Answer

A)   $0 in both A and B.
B)   $100,000 in A.
C)   $100,000 in B.
D)   In both A and B, according to the apportionment formulas of each.

Question 6

Several states allow the S corporation to file a(n) ____________________ income tax return, usually in the form of a state-by-state spreadsheet, on behalf of its out-of-state shareholders.
or

Accepted Answer

The answer of Several states allow the S corporation to...

Question 7

Hopper Corporation's property holdings in State E are as follows.  Compute the numerator of Hopper's E property factor.

Accepted Answer

A)  $100 million.
B)  $135 million.
C)  $140 million.
D)  $160 million.

Question 8

A ____________________ tax is designed to complement the local sales tax structure, to prevent the consumer from making purchases in a lower-tax state or online, and then bringing the asset into the state.

Accepted Answer

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

Question 9

Federal taxable income is used as the starting point in computing the state's income tax base, but numerous state adjustments or modifications generally are required to:

Accepted Answer

A)  Reflect differences between state and Federal tax statutes.
B)  Remove income that a state is constitutionally prohibited from taxing.
C)  Allow for all of the states to use the same definition of taxable income.
D)  a.and b.

Question 10

Perez Corporation is subject to tax only in State A.Perez generated the following income and deductions.  Federal taxable income is the starting point in computing A taxable income.State income taxes are not deductible for A tax purposes.Perez's A taxable income is:

Accepted Answer

A)  $400,000.
B)  $450,000.
C)  $600,000.
D)  $650,000.

Question 11

In determining state taxable income, all of the following are adjustments to Federal income except:

Accepted Answer

A)  A Federal net operating loss.
B)  Federal income tax expense.
C)  Dividends received from other U.S.corporations.
D)  Wages paid to officers and executives.

Question 12

In determining taxable income for state income tax purposes, the Federal NOL deduction typically constitutes a(n) ____________________ modification.

Accepted Answer

The answer of In determining taxable income for state income...

Question 13

Most states' consumer sales taxes apply directly to the final purchaser of the taxable asset, who then remits the tax to the state treasury.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

José Corporation realized $600,000 taxable income from the sales of its products in States X and Z.José's activities in both states establish nexus for income tax purposes.José's sales, payroll, and property among the states include the following.  Z utilizes a double-weighted sales factor in its three-factor apportionment formula.How much of José's taxable income is apportioned to Z?

Accepted Answer

A)  $600,000.
B)  $120,000.
C)  $80,000.
D)  $0.

Question 16

P.L.86-272 ____________________ (does/does not) create nexus when the seller runs a booth with inventory samples, at a one-week trade show in the state.

Accepted Answer

The answer of P.L.86-272 ____________________ (does/does not) create nexus when...

Question 17

Dott Corporation generated $300,000 of state taxable income from selling its mapping software in States A and
B.Both states utilize a three-factor apportionment formula which equally weights sales, property, and payroll.The rates of corporate income tax imposed in A and B are 7% and 10%, respectively.Determine Dott's state income tax liability.
B.For the taxable year, the corporation's activities within the two states were as follows.
  Dott has determined that it is subject to tax in both A and

Accepted Answer

The answer of Dott Corporation generated $300,000 of state taxable...

Question 18

Overall tax liabilities typically ____________________ (increase/decrease) if the members of a unitary group begin to include affiliates that generate net operating losses.

Accepted Answer

The answer of Overall tax liabilities typically ____________________ (increase/decrease) if...

Question 19

The use tax is designed to complement the sales tax.A use tax typically covers purchases made out of state and brought into the jurisdiction.

Accepted Answer

A) True 
 B)False

Question 20

In most states, Federal S corporations must make a separate state-level election of the flow-through status.

Accepted Answer

A) True 
 B)False

Exam 24: Multistate Corporate Taxation

In most states, medical services are exempt from the sales/use tax base.

Slattery Corporation sells widgets in two states. State A levies a 9% effective tax rate, and State B levies a 4% rate. A and B have adopted sales-factor-only apportionment formulas. To reduce overall multistate income tax liabilities, Slattery should:

In determining taxable income for state income tax purposes, the state NOL deduction typically constitutes a(n) ____________________ modification.

Your supervisor has shifted your responsibilities from the Federal corporate income tax to a multistate corporate income tax practice. In what areas might your Federal income tax knowledge also be applicable in your new assignment?

Several states allow the S corporation to file a(n) ____________________ income tax return, usually in the form of a state-by-state spreadsheet, on behalf of its out-of-state shareholders. or

Hopper Corporation's property holdings in State E are as follows. Compute the numerator of Hopper's E property factor.

A ____________________ tax is designed to complement the local sales tax structure, to prevent the consumer from making purchases in a lower-tax state or online, and then bringing the asset into the state.

Federal taxable income is used as the starting point in computing the state's income tax base, but numerous state adjustments or modifications generally are required to:

Perez Corporation is subject to tax only in State A.Perez generated the following income and deductions. Federal taxable income is the starting point in computing A taxable income.State income taxes are not deductible for A tax purposes.Perez's A taxable income is:

In determining state taxable income, all of the following are adjustments to Federal income except:

In determining taxable income for state income tax purposes, the Federal NOL deduction typically constitutes a(n) ____________________ modification.

Most states' consumer sales taxes apply directly to the final purchaser of the taxable asset, who then remits the tax to the state treasury.

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

P.L.86-272 ____________________ (does/does not) create nexus when the seller runs a booth with inventory samples, at a one-week trade show in the state.

Overall tax liabilities typically ____________________ (increase/decrease) if the members of a unitary group begin to include affiliates that generate net operating losses.

The use tax is designed to complement the sales tax.A use tax typically covers purchases made out of state and brought into the jurisdiction.

In most states, Federal S corporations must make a separate state-level election of the flow-through status.