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Exam 12: State and Local Taxes

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Question 21

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The annual value of rented property is not included in the property factor.

A) True
B) False

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Question 22

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List the steps necessary to determine an interstate business's state income tax liability.

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Determine the state tax base,divide into...

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Question 23

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Roxy operates a dress shop in Arlington,Virginia.Lisa,a Maryland resident,comes in for a measurement and purchases a $1,500 dress that is shipped to her Maryland residence using a common carrier.Assuming that Virginia's sales tax rate is 5 percent and that Maryland's sales tax rate is 7 percent,what is Roxy's sales and use tax liability?

Businesses must collect sales tax only in states where it has sales and use tax nexus.

Wyoming imposes an income tax on corporations.

Failure to collect and remit sales taxes by a seller often results in a larger tax liability than failure to pay income taxes.

The state tax base is computed by making adjustments to federal taxable income.

Public Law 86-272 protects a taxpayer from which of the following taxes?

Which of the following is not a general rule for calculating the payroll factor?

Gordon operates the Tennis Pro Shop in Blacksburg,Virginia.Tennis pro decides to expand into Pennsylvania during the current year and try some new sales techniques.Tennis pro advertises on local radio and television as well as national tennis magazines sent into PA.Salesmen give away promotional materials and occasionally sell demonstration models to local shop employees to build goodwill for Tennis Pro.It holds sales meetings at rented space in local hotels.Personnel occasionally fix minor problems such as tape and strings without charge.One employee performed a credit check for a major account who needed merchandise immediately.Each sales person is allowed an allowance for a car and office equipment to be maintained in an in-home office.Do any of Tennis Pro activities have the potential to create income tax nexus?

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

All 50 states impose a sales and use tax system.

Della Corporation is headquartered in Carlisle,Pennsylvania.Della has a Pennsylvania state income tax base of $425,000.Of this amount,$75,000 was nonbusiness income.Della's Pennsylvania apportionment factor is 28.52 percent.The nonbusiness income allocated to Pennsylvania was $61,000.Assuming a Pennsylvania corporate tax rate of 7.75 percent,what is Della's Pennsylvania state tax liability? (Round your answer to the nearest whole number)

Gordon operates the Tennis Pro Shop in Blacksburg,Virginia.Tennis Pro has property as follows: Tennis Pro also rents Virginia property at an annual rent of $24,000.What is Tennis Pro's Virginia property numerator and property factor?

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

Tennis Pro has the following sales,payroll and property factors: What would Tennis Pro's Virginia and Maryland apportionment factors be if Virginia used a double-weighted sales four factor method and Maryland used a single-factor sales formula?

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 (6.6 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 throwback rule requires a company,for apportionment purposes,to include all sales of inventory sold into a state without nexus rather than from the state from where the inventory was shipped.

All states employ some combination of sales and use tax,income or franchise tax,or property tax to fund their government operations.

Sales personnel investigating a potential customer's creditworthiness generally are deemed to exceed protected boundaries of solicitation.