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Exam 24: Multistate Corporate Taxation

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Question 71

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Mandy Corporation realized $1,000,000 taxable income from the sales of its products in States X and Z.Mandy's activities establish nexus for income tax purposes only in Z.Mandy's sales, payroll, and property among the states include the following. X utilizes a sales-only factor in its three-factor apportionment formula.How much of Mandy's taxable income is apportioned to X?

A) $0.
B) $333,333.
C) $543,333.
D) $1,000,000.

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

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Question 72

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The ____________________ tax usually is applied at the city or county level, as its main source of revenue.

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Question 73

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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?

The sale of groceries to an individual probably is exempt from sales/use tax under the _________________________ rule.

P.L.86-272 ____________________ (does/does not) create nexus when the sales representative also makes credit decisions before approving a sale at the customer's location.

Almost all of the states allow ____________________ treatment to an LLC for income tax purposes. or or

A unitary business applies a combined apportionment formula, including data from operations of all of the affiliates.

Nonbusiness income receives tax-exempt treatment under all state corporate income taxes.

The property factor includes business assets that the taxpayer owns, but also those merely used under a lease agreement.

Pail Corporation is a merchandiser.It purchases overstock garments from various suppliers and sells the goods in its State L retail store.Determine the total sales that are subject to the L consumer sales tax.

Match each of the following events to its likely effect on WillCo's various apportionment factors. WillCo is based in Q and has customers in Q, R, and S. To this point, WillCo has not established nexus with S.More than one choice may be correct.

In conducting multistate tax planning, the taxpayer should:

Shaker Corporation operates in two states, as indicated below.All goods are manufactured in State A.Determine the sales to be assigned to both states to be used in computing Shaker's sales factor for the year.Both states follow the UDITPA and the MTC regulations in this regard. * Excess warehouse space ** Land held for speculation * Excess warehouse space, related to business ** Land held for speculation, nonbusiness income

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?

When a _________________________ is in effect, out-of-state sales that are not subject to tax in the destination state are pulled back into the sales factor numerator of the origination state.

A use tax applies when a State A resident purchases:

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

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

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:

General Corporation is taxable in a number of states. This year, General made a $100,000 sale from its A headquarters to an agency of the U.S. government. State A applies a throwback rule. In which state(s) will the sale be included in the sales factor numerator?