Question 1

Marquardt Corporation realized $900,000 taxable income from the sales of its products in States X and Z.Marquardt's activities establish nexus for income tax purposes in both states.Marquardt's sales,payroll,and property among the states include the following.
Z utilizes an equally weighted three-factor apportionment formula.Marquardt is incorporated in X.How much of Marquardt's taxable income is apportioned to Z?

Accepted Answer

A) $0 
B) $225,000 
C) $675,000 
D) $3,000,000

Question 2

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected.
a.Taxable
b.Not taxable
-Computing services purchased by a business.

Accepted Answer

The answer of Match each of the following items with...

Question 3

Parent and Minor form a non-unitary group of corporations.Parent is located in a state with an effective tax rate of 3%,while Minor's effective tax rate is 9%.Acting in concert to reduce overall tax liabilities,the group should:

Accepted Answer

A) Have Parent charge Minor an annual management fee. 
B) Shift Parent's high-cost assembly and distribution operations to Minor. 
C) Execute an intercompany loan, such that Minor pays deductible interest to Parent. 
D) All of the above are effective income-shifting techniques for a non-unitary group. 
E) None of the above is an effective income-shifting technique for a non-unitary group.

Question 4

​In the income tax apportionment formula,market-sourcing the sales factor means that:
​

Accepted Answer

A) ​Sales are sourced to the state of the seller. 
B) ​Sales are sourced to the state of the customer. 
C) ​Sales are sourced to the state of the seller's corporate headquarters, i.e., where the marketing department works. 
D) ​Sales are sourced to the state(s) where the customer will use the product, i.e., to the customers markets.

Question 5

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

Accepted Answer

A) 100.00%. 
B) 66.67%. 
C) 62.50%. 
D) 50.00%.

Question 6

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 7

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

Accepted Answer

The answer of ____________________ describe(s) the degree of business activity...

Question 8

A taxpayer has nexus with a state for sales and use tax purposes if it has a physical presence in the state.

Accepted Answer

A) True 
 B)False

Question 9

Milt Corporation owns and operates two facilities that manufacture paper products.One of the facilities is located in State D,and the other is located in State E.Milt generated $1,200,000 of taxable income,comprised of $1,000,000 of income from its manufacturing facilities and a $200,000 gain from the sale of nonbusiness property located in E.E does not distinguish between business and nonbusiness property.D apportions business income.Milt's activities within the two states are outlined below.
​
​
  
Both D and E utilize a three-factor apportionment formula,under which sales,property,and payroll are equally weighted.Determine the amount of Milt's income that is subject to income tax by each state.

Accepted Answer

The answer of Milt Corporation owns and operates two facilities...

Question 10

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...

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not immune from state income taxation,even if P.L.86-272 is in effect?

Accepted Answer

A) Sale of office equipment that is used in the taxpayer's business. 
B) Sale of office equipment that constitutes inventory to the purchaser. 
C) Sale of a warehouse used in the taxpayer's business. 
D) All of the above are protected by P.L. 86-272 immunity provisions.

Question 13

Match each of the following events, considered independently, to its likely effect on WillCo's various apportionment factors. WillCo is based in Q and has customers in Q, R, and S. To this point, WillCo has not established nexus with S. More than one choice may be correct.
a.No change in apportionment factors
b.Q apportionment factor increases
c.Q apportionment factor decreases
d.R apportionment factor increases
e.R apportionment factor decreases
f.S apportionment factor increases
g.S apportionment factor decreases
-Q adopts a throwback rule.

Accepted Answer

The answer of Match each of the following events, considered...

Question 14

Match each of the following terms with the appropriate description, in the state income tax formula. Apply the UDITPA rules in your responses.
a.Addition modification
b.Subtraction modification
c.No modification
-Treasury Bond interest income.

Accepted Answer

The answer of Match each of the following terms with...

Question 15

When the taxpayer operates in one or more unitary states:

Accepted Answer

A) Apportionment factors are computed on a group-wide basis. 
B) The tax incentive of creating nexus in a low-tax state is enhanced. 
C) The tax benefit of a passive investment subsidiary holding company is neutralized. 
D) The use of a water's edge election should be considered. 
E) All of the above are true.

Question 16

S corporations flow-through income amounts to its shareholders,and most states require a withholding of shareholder taxes on the allocated amounts.

Accepted Answer

A) True 
 B)False

Question 17

Parent Corporation owns all of the stock of Junior Corporation,a Delaware passive investment company.Parent operates strictly in nonunitary State B,which levies a 9% income tax.This year,Junior earned $200,000 of portfolio interest income and paid a $150,000 dividend to Parent.In which state(s) will the interest income create an income tax liability?

Accepted Answer

A) Only in B. 
B) Only in Delaware. 
C) In neither state. 
D) In both B and Delaware, according to the apportionment formulas of each.

Question 18

A typical state taxable income subtraction modification is the interest income earned from another state's bonds.

Accepted Answer

A) True 
 B)False

Question 19

A typical state taxable income addition modification is for the state's NOL allowed the taxpayer for the tax year.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

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

Exam 24: Multistate Corporate Taxation

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected. a.Taxable b.Not taxable -Computing services purchased by a business.

Parent and Minor form a non-unitary group of corporations.Parent is located in a state with an effective tax rate of 3%,while Minor's effective tax rate is 9%.Acting in concert to reduce overall tax liabilities,the group should:

​In the income tax apportionment formula,market-sourcing the sales factor means that: ​

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?

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

A taxpayer has nexus with a state for sales and use tax purposes if it has a physical presence in the state.

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.

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

Which of the following is not immune from state income taxation,even if P.L.86-272 is in effect?

Match each of the following terms with the appropriate description, in the state income tax formula. Apply the UDITPA rules in your responses. a.Addition modification b.Subtraction modification c.No modification -Treasury Bond interest income.

When the taxpayer operates in one or more unitary states:

S corporations flow-through income amounts to its shareholders,and most states require a withholding of shareholder taxes on the allocated amounts.

A typical state taxable income subtraction modification is the interest income earned from another state's bonds.

A typical state taxable income addition modification is for the state's NOL allowed the taxpayer for the tax year.

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

In the income tax apportionment formula,market-sourcing the sales factor means that: