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Exam 24: Multistate Corporate Taxation

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Question 51

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If a state follows Federal income tax rules,the state's tax compliance and enforcement become easier to accomplish.

A) True
B) False

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Question 52

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The sales/use tax that is employed by most U.S.states does not fall on all retail transactions.Identify at least five sales/use tax exemptions that states often allow,eliminating certain transactions from the tax base.

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Most state and local governmen...

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Question 53

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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?

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:

Under _____________________,a state is prohibited from taxing a business if the only connection with the state is the solicitation 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.

Typically exempt from the sales/use tax base is the purchase of prescription medicines by an individual.

Typical indicators of nexus include the presence of employees based in the state,and the ownership or lease of realty there.

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

Parent and Junior form a non-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:

Wailes Corporation is subject to a corporate income tax only in State X.The starting point in computing X taxable income is Federal taxable income.Wailes' Federal taxable income is $750,000,which includes a $75,000 deduction for state income taxes.During the year,Wailes received $20,000 interest on Federal obligations.X tax law does not allow a deduction for state income tax payments. Wailes' taxable income for X purposes is:

Given the following transactions for the year,determine Comp Corporation's D payroll factor denominator.State D has adopted the principles of UDITPA.

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?

A few states recognize an entity's S corporation status,such that taxable income flows through directly to shareholders,but they also assess a state-level tax on the entity.

Although apportionment formulas vary among jurisdictions,most states use a three-factor formula.The factors are ____________________,____________________,and ____________________. or or

Almost all of the states treat a general partnership as a ____________________ entity for income tax purposes. or

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:

State and local politicians tend to apply new and increased taxes to taxpayers who are visitors to the jurisdiction and cannot vote to reelect the lawmaker.

The typical state sales/use tax falls on sales of both real and personal property.

A(n)____________________ business operates its separate companies as a whole.It cannot be segregated into independently operating divisions or branches.

Boot Corporation is subject to income tax in States A and B.Boot's operations generated $200,000 of apportionable income,and its sales and payroll activity and average property owned in each of the states is as follows. How much more (less) of Boot's income is subject to A income tax if,instead of using an equally-weighted three-factor apportionment formula,A uses a formula with a double-weighted sales factor?