Question 1

For most taxpayers, which of the traditional apportionment factors yields the greatest opportunities for tax reduction?

Accepted Answer

A)  Payroll.
B)  Property.
C)  Sales (gross receipts) .
D)  Unitary.E) A) and B)
F) B) and D)

Question 2

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 3

State and local politicians tend to apply new and increased taxes to taxpayers who are non resident visitors to the jurisdiction, such as a tax on auto rentals, because the taxpayer cannot vote to reelect the lawmaker.

Accepted Answer

A) True 
 B)False

Question 4

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.F) A) and D)
G) C) and E)

Question 5

An LLC apportions and allocates its annual taxable income in the same manner used by any other business operating in the state.

Accepted Answer

A) True 
 B)False

Question 6

____________________ 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 7

When the taxpayer has exposure to a capital stock tax:

Accepted Answer

A)  The pricing of inventory sales should reflect no more than inflation increases.
B)  Subsidiary operations should be funded through direct capital contributions.
C)  Dividends should be paid regularly to a parent based in a low-tax state.
D)  Expansions should be funded with retained earnings.E) B) and C)
F) All of the above

Question 8

You are completing the State A income tax return for Quaint Company, LLC. Quaint operates in various states, showing the following results. $\begin{array}{lr}
\text { Ordinary income } & \$ 800,000 \
\text { Net capital loss } & (60,000) \
\text { Interest income, IBM bond } & 40,000
\end{array}$ In A, all interest is treated as apportionable income. A uses a sales-only apportionment factor. Compute Quaint's A taxable income.
​ $$\begin{array} { l r r r } 
& \text { State A } & \text { All Other States } & \text { T otal } \
\text { Sales } & \$ 800,000 & \$ 1,200,000 & \$ 2,000,000 \
\text { Property (average cost) } & 250,000 & 2,000,000 & 2,250,000 \
\text { Payroll } & 300,000 & 700,000 & 1,000,000
\end{array}$$

Accepted Answer

LLCs allocate and apportion state taxabl...

Question 9

Britta Corporation's entire operations are located in State A. Eighty percent ($800,000)  of Britta's sales are made in A and the remaining sales ($200,000)  are made in State B. B has not adopted a corporate income tax. If A has adopted a throwback rule, the numerator of Britta's A sales factor is:

Accepted Answer

A)  $0.
B)  $200,000.
C)  $800,000.
D)  $1,000,000.E) B) and D)
F) B) and C)

Question 10

Hendricks Corporation sells widgets in two states. State A levies a 9% effective tax rate, and State B levies a 3% rate. A and B have adopted sales-factor-only apportionment formulas. To reduce overall multistate income tax liabilities, Hendricks should:

Accepted Answer

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

Question 11

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

A U.S. state cannot levy an income tax o...

Question 12

Politicians frequently use tax credits and exemptions to create economic development incentives.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

A state might levy a(n) ____________________ tax when an investor sells shares of stock.

Accepted Answer

stock tran...

Question 15

A state sales tax usually falls upon:

Accepted Answer

A)  The sale of a used dinette set sold at a rummage sale.
B)  The sale of a dinette set by the manufacturer to a furniture retailer.
C)  The sale of a case of Bibles by the publisher to a church bookstore.
D)  The sale of a Bible to a member of the church.
E)  All of the above are exempt transactions.F) B) and C)
G) A) and B)

Question 16

Match each of the following terms with the appropriate description, in the state income tax formula. Apply the UDITPA rules in your responses.
-Federal depreciation deduction in excess of state amount.

Accepted Answer

A)  Addition modification
B)  Subtraction modification
C)  No modificationD) None of the above
E) B) and C)

Question 17

A state sales tax usually falls upon:

Accepted Answer

A)  Sales of groceries.
B)  Sales of widgets made to out-of-state customers.
C)  Sales of widgets made to an in-state ultimate consumer of the product or service.
D)  Sales of real estate.E) A) and D)
F) All of the above

Question 18

Adams Corporation owns and operates two manufacturing facilities, one in State X and the other in State Y. Due to a temporary decline in the corporation's sales, Adams has rented 20% of its Y facility to an unaffiliated corporation. Adams generated $1,000,000 net rental income and $5,000,000 income from manufacturing. ​
Adams is incorporated in Y. For X and Y purposes, rental income is classified as allocable nonbusiness income. By applying the statutes of each state, Adams determined that its apportionment factors are .65 for X and .35 for Y.
​
Adams's income attributed to X is:

Accepted Answer

A)  $0.
B)  $3,250,000.
C)  $3,900,000.
D)  $5,000,000.
E)  $6,000,000.F) C) and D)
G) B) and E)

Question 19

P.L. 86-272 ____________________ (does/does not) create nexus when the seller inserts advertising flyers into the Sunday newspaper that is sold in the state.

Accepted Answer

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

Question 20

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected.
-A garment purchased by an employee for wear at an office job.

Accepted Answer

A)  Taxable
B)  Not taxableC) A) and B)
D) undefined

Exam 16: Multi-State Corporate Taxations

Politicians frequently use tax credits and exemptions to create economic development incentives.

Correct Answer
verified

Correct Answer
verified
LLCs allocate and apportion state taxabl...
View Answer

When the taxpayer has exposure to a capital stock tax:

Correct Answer
verified

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected. -A garment purchased by an employee for wear at an office job.

Correct Answer
verified

Britta Corporation's entire operations are located in State A. Eighty percent ($800,000) of Britta's sales are made in A and the remaining sales ($200,000) are made in State B. B has not adopted a corporate income tax. If A has adopted a throwback rule, the numerator of Britta's A sales factor is:

Correct Answer
verified

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.

Correct Answer
verified

When the taxpayer operates in one or more unitary states:

Correct Answer
verified

A state sales tax usually falls upon:

Correct Answer
verified

Hendricks Corporation sells widgets in two states. State A levies a 9% effective tax rate, and State B levies a 3% rate. A and B have adopted sales-factor-only apportionment formulas. To reduce overall multistate income tax liabilities, Hendricks should:

Correct Answer
verified

P.L. 86-272 ____________________ (does/does not) create nexus when the seller inserts advertising flyers into the Sunday newspaper that is sold in the state.

Correct Answer
verified

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

Correct Answer
verified

For most taxpayers, which of the traditional apportionment factors yields the greatest opportunities for tax reduction?

Correct Answer
verified

State and local politicians tend to apply new and increased taxes to taxpayers who are non resident visitors to the jurisdiction, such as a tax on auto rentals, because the taxpayer cannot vote to reelect the lawmaker.

Correct Answer
verified

An LLC apportions and allocates its annual taxable income in the same manner used by any other business operating in the state.

Correct Answer
verified

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?

Correct Answer
verified
A U.S. state cannot levy an income tax o...
View Answer

Correct Answer
verified

A state sales tax usually falls upon:

Correct Answer
verified

____________________ 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.

Correct Answer
verified

Match each of the following terms with the appropriate description, in the state income tax formula. Apply the UDITPA rules in your responses. -Federal depreciation deduction in excess of state amount.

Correct Answer
verified

A state might levy a(n) ____________________ tax when an investor sells shares of stock.

Correct Answer
verified
stock tran...
View Answer

Exam 16: Multi-State Corporate Taxations

Politicians frequently use tax credits and exemptions to create economic development incentives.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedLLCs allocate and apportion state taxabl...View AnswerShow Answer

When the taxpayer has exposure to a capital stock tax:

Correct AnswerverifiedShow Answer

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected. -A garment purchased by an employee for wear at an office job.

Correct AnswerverifiedShow Answer

Britta Corporation's entire operations are located in State A. Eighty percent ($800,000) of Britta's sales are made in A and the remaining sales ($200,000) are made in State B. B has not adopted a corporate income tax. If A has adopted a throwback rule, the numerator of Britta's A sales factor is:

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

When the taxpayer operates in one or more unitary states:

Correct AnswerverifiedShow Answer

A state sales tax usually falls upon:

Correct AnswerverifiedShow Answer

Hendricks Corporation sells widgets in two states. State A levies a 9% effective tax rate, and State B levies a 3% rate. A and B have adopted sales-factor-only apportionment formulas. To reduce overall multistate income tax liabilities, Hendricks should:

Correct AnswerverifiedShow Answer

P.L. 86-272 ____________________ (does/does not) create nexus when the seller inserts advertising flyers into the Sunday newspaper that is sold in the state.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For most taxpayers, which of the traditional apportionment factors yields the greatest opportunities for tax reduction?

Correct AnswerverifiedShow Answer

State and local politicians tend to apply new and increased taxes to taxpayers who are non resident visitors to the jurisdiction, such as a tax on auto rentals, because the taxpayer cannot vote to reelect the lawmaker.

Correct AnswerverifiedShow Answer

An LLC apportions and allocates its annual taxable income in the same manner used by any other business operating in the state.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedA U.S. state cannot levy an income tax o...View AnswerShow Answer

Correct AnswerverifiedShow Answer

A state sales tax usually falls upon:

Correct AnswerverifiedShow Answer

____________________ 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.

Correct AnswerverifiedShow Answer

Match each of the following terms with the appropriate description, in the state income tax formula. Apply the UDITPA rules in your responses. -Federal depreciation deduction in excess of state amount.

Correct AnswerverifiedShow Answer

A state might levy a(n) ____________________ tax when an investor sells shares of stock.

Correct Answerverifiedstock tran...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified
LLCs allocate and apportion state taxabl...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A U.S. state cannot levy an income tax o...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
stock tran...
View Answer