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Exam 12: State and Local Taxes

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Question 61

True/False

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Several states are now moving from a strict physical presence test towards an economic presence test.

A) True
B) False

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Question 62

Multiple Choice

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Which of the following regarding the state tax base is incorrect?

A) It is computed by making adjustments to federal taxable income.
B) It is divided into business and nonbusiness income.
C) It is a necessary step in the state income tax process.
D) It applies only to interstate businesses.

E) B) and C)
F) All of the above

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Question 63

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Public Law 86-272 protects only companies selling tangible personal property.

Tennis Pro is headquartered in Virginia. Assume it has a state income tax base of $200,000. Of this amount, $60,000 was non-business income. Assume that Tennis Pro's Virginia apportionment factor is 73.28 percent. The non-business income allocated to Virginia was $23,000. Assuming a Virginia corporate tax rate of 5.5 percent, what is Tennis Pro's Virginia state tax liability? (Round your answer to the nearest whole number.)

In which of the following state cases did the state not assert economic nexus?

On which of the following transactions should sales tax generally be collected?

Mahre, Incorporated, a New York corporation, runs ski tours in a several states. Mahre also has a New York retail store and an Internet store which ships to out-of-state customers. The ski tours operate in Maine, New Hampshire, and Vermont where Mahre has employees and owns and uses tangible personal property. Mahre has real property only in New York. Mahre has the following sales: Assume the following sales tax rates: Alaska (0 percent) , Colorado (7.75 percent) , Maine (8.5 percent) , New Hampshire (6.75 percent) , New York (8 percent) , and Vermont (5 percent) . How much sales and use tax must Mahre collect and remit in Maine?

The trade-show rule allows businesses to maintain a sample room for up to four weeks per year.

Which of the following isn't a criteria used to determine whether a unitary relationship exists?

Delivery of tangible personal property through common carrier is a protected activity.

Businesses engaged in interstate commerce are subject to income tax in every state in which they operate.

What was the Supreme Court's holding in Quill?

Which of the following sales is always subject to sales and use tax in a state that assesses a sales and use tax?

Giving samples and promotional materials without charge is a protected solicitation activity.

Many states are either starting to or are in the process of expanding the types of services subject to sales tax.

Which of the following is not a primary revenue source for most states?

Interest and dividends are allocated to the state of commercial domicile.