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Exam 15: Multistate Corporate Taxation

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Question 31

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Match each of the following terms with the appropriate description, in the state income tax formula. a.Addition modification b.Subtraction modification c.No modification -Federal NOL deduction

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Question 32

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Most states waive the collection of sales tax on groceries.

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B) False

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Question 33

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

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 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.

Typically exempt from the sales/use tax base is the purchase of lumber by a do-it-yourself homeowner,when she builds a deck onto her patio.

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 a few states,a Federal S corporation is exempt from state corporate income tax only if ____________________ of its shareholders are state residents.

Match each of the following terms with the appropriate description, in the state income tax formula. a.Addition modification b.Subtraction modification c.No modification -Federal R & D credit

States use the same apportionment factors and formula.

Boot Corporation is subject to income tax in States A and B.Boot's operations generated $1,200,000 of apportionable income,and its sales and payroll activity and average property owned in each of the states is as follows. How much more (less) of Boot's income is subject to A income tax if,instead of using an equally-weighted three-factor apportionment formula,A uses a formula with a double-weighted sales factor?

Under P.L.86-272,which of the following transactions by itself would create nexus with a state?

Only a few states require that Federal S corporations make a separate state-level election of the flow-through status.

State A does not apply a throwback rule.General Corporation is taxable in a number of states and made a $100,000 sale from its A headquarters to a State B office of an agency of the U.S.government.General has not established nexus with B.In which state(s) will the sale be included in the sales factor?

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

The property factor includes real property and construction in progress.

A typical state taxable income addition modification is the income tax paid to the state for the year.

The starting point in computing state taxable income generally 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 -Conducting an advertising campaign on local TV stations

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.

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: