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Exam 23: State and Local Taxes

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Question 51

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Which of the following isn't a criterion used to determine whether a unitary relationship exists?

A) Functional integration.
B) Centralized management.
C) Economies of scale.
D) Consolidated return status.

E) All of the above
F) B) and C)

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Question 52

Multiple Choice

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Public Law 86-272 protects solicitation from income taxation.Which of the following activities exceeds the solicitation threshold?

A) Any form of advertising.
B) Distribution of samples without charge.
C) Accepting a down payment.
D) Checking a customer's inventory.

E) A) and D)
F) None of the above

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Question 53

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Nondomiciliary businesses are subject to tax everywhere they do business.

Handsome Rob provides transportation services in several western states.Rob has payroll as follows: Rob is a California corporation and the following is true: Rob has income tax nexus in Arizona,California,Nevada,and Washington.The Washington drivers spend 25 percent of their time driving through Oregon.California payroll includes $200,000 of payroll for services provided in Nevada by California-based drivers.What is Rob's California payroll numerator?

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

Economic presence always creates sales tax nexus.

Super Sadie,Incorporated,manufactures sandals and distributes them across the southwestern United States.Super Sadie is incorporated and headquartered in Arizona.It has product sales to customers in Arizona,California,Colorado,New Mexico,Oregon,Texas,and Utah.In each state it has sales of less than $100,000 on under 200 transactions.It has sales personnel in California,Colorado,and New Mexico.It also owns an office building in Arizona and a warehouse in Texas.Determine the states in which Super Sadie has sales tax nexus.

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

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

Tennis Pro is headquartered in Virginia.Assume it has a Kentucky state income tax base of $220,000.Of this amount,$40,000 was nonbusiness income.Assume that Tennis Pro's Kentucky sales,payroll,and property apportionment factor are 12,5,and 3 percent,respectively.Assume that Kentucky uses a single-factor sales formula apportionment method.The nonbusiness income allocated to Kentucky was $1,000.Assuming Kentucky's corporate tax rate is 6 percent,what is Tennis Pro's Kentucky state income tax liability?

Which of the following activities will create sales tax nexus?

Which of the following is an income-based tax?

Federal/state adjustments correct for differences between two states' tax laws.

Businesses subject to income tax in more than one jurisdiction have the right to apportionment.

Which of the following isn't a typical federal/state adjustment?

Gordon operates the Tennis Pro Shop in Blacksburg,Virginia.Tennis Pro has property as follows: Tennis Pro also rents Virginia property at an annual rent of $24,000.What is Tennis Pro's Virginia property numerator and property factor? (Round interim calculations to the nearest whole number and the property factor to two decimal places.)

A state's apportionment formula usually is applied using some variation of sales,payroll,and property factors.

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.Roxy's total Maryland sales are $20,000 on 15 transactions.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?

Lefty provides demolition services in several southern states.Lefty has property as follows: Lefty is a Mississippi corporation.Lefty also rents property in Mississippi and Tennessee with annual rents of $50,000 and $15,000,respectively.What is Lefty's Mississippi property numerator? (Round your answer to the nearest whole number.)

Wyoming imposes an income tax on corporations.