Question 1

Most states begin the computation of taxable income with an amount from the Federal income tax return.

Accepted Answer

A) True 
 B)False

Question 2

Typically included in 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 3

A capital stock tax usually is structured as an excise tax imposed on a corporation's "net worth," using financial statement data to compute the tax.

Accepted Answer

A) True 
 B)False

Question 4

The property factor includes land and buildings used for business purposes.

Accepted Answer

A) True 
 B)False

Question 5

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 6

In unitary states,a(n)____________________ provision permits a multinational corporation to elect to limit the reach of the state's taxing jurisdiction to activities occurring within the boundaries of the United States.

Accepted Answer

The answer of In unitary states,a(n)____________________ provision permits a multinational...

Question 7

A local business wants your help in making a decision about a large capital investment.Should your advice concentrate on tax or non-tax implications of the decision?

Accepted Answer

The answer of A local business wants your help in...

Question 8

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 9

Under Public Law 86-272,a state is prohibited from taxing a business if the only connection with the state is the _____________________ 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.

Accepted Answer

The answer of Under Public Law 86-272,a state is prohibited...

Question 10

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.

Question 11

The model law relating to the assignment of income among the states for corporations is:

Accepted Answer

A) The Multistate Tax Treaty. 
B) The Uniform Division of Income for Tax Purposes Act (UDITP
A) . 
C) Public Law 86-272. 
D) The Multistate Tax Commission (MT
C) .

Question 12

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

Accepted Answer

A) True 
 B)False

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

Leased property,when included in the property factor,usually is valued at ____________________ times its annual rental,even though the taxpayer does not own the asset.
or

Accepted Answer

The answer of Leased property,when included in the property factor,usually...

Question 15

In conducting multistate tax planning,the taxpayer should:

Accepted Answer

A) Review tax opportunities in light of their effect on the overall business. 
B) Exploit inconsistencies among the taxing statutes and formulas of the states. 
C) Consider the tax effects of the plan after accounting for any new compliance and administrative costs that it generates. 
D) All of the above are true.

Question 16

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 17

A number of court cases in the last several decades have involved the application of a state's nexus rules concerning a business taxpayer.What is the significance of the term nexus when discussing state income taxation?

Accepted Answer

The answer of A number of court cases in the...

Question 18

Almost all of the states allow ____________________ treatment to an LLC for income tax purposes.
or
or

Accepted Answer

The answer of Almost all of the states allow ____________________...

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

If a gift card is unused after a specified period of time,the state can collect the amount of the card proceeds from the seller,as ____________________ property.

Accepted Answer

The answer of If a gift card is unused after...

Exam 16: Multistate Corporate Taxation

Most states begin the computation of taxable income with an amount from the Federal income tax return.

Typically included in 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 capital stock tax usually is structured as an excise tax imposed on a corporation's "net worth," using financial statement data to compute the tax.

The property factor includes land and buildings used for business purposes.

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?

In unitary states,a(n)____________________ provision permits a multinational corporation to elect to limit the reach of the state's taxing jurisdiction to activities occurring within the boundaries of the United States.

A local business wants your help in making a decision about a large capital investment.Should your advice concentrate on tax or non-tax implications of the decision?

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.

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:

The model law relating to the assignment of income among the states for corporations is:

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

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

Leased property,when included in the property factor,usually is valued at ____________________ times its annual rental,even though the taxpayer does not own the asset. or

In conducting multistate tax planning,the taxpayer should:

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

A number of court cases in the last several decades have involved the application of a state's nexus rules concerning a business taxpayer.What is the significance of the term nexus when discussing state income taxation?

Almost all of the states allow ____________________ treatment to an LLC for income tax purposes. or or

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

If a gift card is unused after a specified period of time,the state can collect the amount of the card proceeds from the seller,as ____________________ property.