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Exam 15: Multistate Corporate Taxation

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Question 51

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Almost all of the states assess some form of consumer-level sales tax.

A) True
B) False

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Question 52

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Under most local property tax laws,the value of an asset is fixed after an appraisal by the taxing jurisdiction.

A) True
B) False

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Question 53

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A state cannot levy a tax on a business unless the business was incorporated in the state.

An assembly worker earns a $30,000 salary and receives a fringe benefit package worth $15,000.The payroll factor assigns $45,000 for this employee.

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.

In determining state taxable income,all of the following are adjustments to Federal income except:

In most states,a limited liability company (LLC) is subject to the state income tax:

Only a few states have adopted an alternative minimum tax,similar to the Federal system.

Define the terms allocation and apportionment as they are used in multistate income taxation.

P.L.86-272 ____________________ (does/does not)create nexus when the seller owns real estate in the state.

By making a water's edge election,the multinational taxpayer can limit the reach of the unitary theory to U.S.-based factors and income.

Garcia Corporation is subject to tax in States G,H,and I.Garcia's compensation expense includes the following. Officers' salaries are included in the payroll factor for G and H,but not for I.Compute Garcia's payroll factors for G,H,and I.

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

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 -Computer equipment purchased by a charity

In conducting multistate tax planning,the taxpayer should:

You are completing the State A income tax return for Quaint Corporation.Quaint is a limited liability company,and it operates in various states,showing the following results. In A,all interest is treated as business income.A uses a sales-only apportionment factor.Assuming the following data are correct,compute Quaint's A taxable income.

Match each of the following items with the appropriate description, in applying the P.L. 86-272 definition of solicitation. a.More than solicitation, creates nexus b.Solicitation only, no nexus created -Maintaining an in-state office for product repair

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:

Match each of the following items with the appropriate description, in applying the P.L. 86-272 definition of solicitation. a.More than solicitation, creates nexus b.Solicitation only, no nexus created -Training administrative personnel

Overall tax liabilities will ____________________ if the members of a unitary group begin to include affiliates subject to higher effective tax rates.