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Exam 24: Multistate Corporate Taxation

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Question 21

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Typically, a sales/use tax is applied to a retail sale of ____________________ property.

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Question 22

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

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Question 23

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A taxpayer wishing to reduce the negative tax effects of the application of the unitary theory might:

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

In conducting multistate tax planning, the taxpayer should:

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

José Corporation realized $600,000 taxable income from the sales of its products in States X and Z.José's activities in both states establish nexus for income tax purposes.José's sales, payroll, and property among the states include the following. X utilizes an equally weighted three-factor apportionment formula.How much of José's taxable income is apportioned to X?

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

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

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

A typical state taxable income addition modification is for the Federal income tax paid for the period.

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

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

The individual seller of a used auto should collect and remit sales tax to the state.

Hermann Corporation is based in State A (corporate income tax rate 10%).It sells its goods to customers in both A and State B (corporate income tax rate 4%). Hermann's state taxable income for the year is $1 million, 30% of which relates to B customers. Hermann's level of activities in B is insufficient to create nexus there, but A has adopted a throwback rule as to multistate sales. Would Hermann reduce its total state income tax liability by creating nexus with B, say by allowing its sales force to make credit decisions? Elaborate.

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

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.

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

Parent and Junior form a 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:

In determining taxable income for state income tax purposes, the state NOL deduction typically constitutes a(n) ____________________ modification.