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Exam 24: Multistate Corporate Taxation

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Question 1

Multiple Choice

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

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

E) A) and B)
F) C) and D)

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Question 2

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States collect the most tax dollars from the sales/use tax.

A) True
B) False

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Question 3

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In the broadest application of the unitary theory,the U.S.unitary business files a combined tax return using factors and income amounts for all affiliates:

Under P.L.86-272,the taxpayer is exempt from state taxes on income resulting from the mere solicitation of orders for the sale of tangible personal property in the state.

Flake Corporation's property holdings in State E are as follows. Compute the numerator of Flake's E property factor.

A state sales tax is designed to be collected by the ____________________ (seller/purchaser)of the product and then remitted to the state.

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

Although Bowl Corporation's manufacturing facility,distribution center,and retail store are located in State K,Bowl sells its products to residents located in States K,M,and N.Sales to residents of K are conducted through a retail store.Sales to residents of M are obtained by Bowl's sales representative,who has the authority to accept and approve sales orders.Residents of N can purchase Bowl's product only if they place an order online and arrange to take delivery of the product at Bowl's shipping dock.Bowl's sales were as follows. Bowl's activities within the three states are limited to those described above.All of the states have adopted a throwback provision and utilize a three-factor apportionment formula under which sales,property,and payroll are equally weighted.K sources dock sales to the destination state.Determine Bowl's sales factors for K,M,and N.

A typical state taxable income addition modification is the Federal income tax expense.

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

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

States use a common apportionment formula and set of factors,known as the Streamlined Sales Tax Method.

In determining the numerator of the sales factor,most states follow UDITPA's ____________________ concept,whereunder sales are assumed to take place at the point of delivery,as opposed to the location at which the shipment originates.

In multistate income taxation,the sales factor applies the "ultimate destination concept." Define this term,and identify at least two of its most important exceptions.

Typically exempt from the sales/use tax base is the purchase of inventory from a competitor who is closing down a long-lived business.

The corporate income tax provides about one-half of the annual tax revenues for the typical U.S.state.

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

In conducting multistate tax planning,the taxpayer should:

All but a few states have adopted a tax based on net taxable income.