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Exam 24: Multistate Corporate Taxation

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Question 31

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All of the U.S.states use an apportionment formula based on the sales, property, and payroll factors.

A) True
B) False

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Question 32

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

A) True
B) False

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Question 33

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Garcia Corporation is subject to tax in States G, H, and I.Garcia's compensation expense includes the following.

General Corporation is taxable in a number of states. This year, General made a $100,000 sale from its A headquarters to a customer in B. This activity is not sufficient for General to create nexus with B. State A applies a throwback rule, but State B does not. In which state(s) will the sale be included in the sales factor numerator?

Flint Corporation is subject to a corporate income tax only in State X.The starting point in computing X taxable income is Federal taxable income.Flint's Federal taxable income is $750,000, which includes a $50,000 deduction for state income taxes.During the year, Flint received $10,000 interest on Federal obligations.X tax law does not allow a deduction for state income tax payments. Flint's taxable income for X purposes is:

Condor Corporation generated $450,000 of state taxable income from selling its product in States A and B.Both states utilize a three-factor apportionment formula that equally weights sales, property, and payroll.The rates of corporate income tax imposed in A and B are 5% and 3%, respectively.Determine Condor's state income tax liability. B.For the taxable year, the corporation's activities within the two states were as follows. Condor has determined that it is subject to tax in both A and

Under P.L.86-272, the taxpayer is exempt from state taxes on income resulting from the mere solicitation of orders for the sale of stocks and bonds.

Politicians frequently use tax credits and exemptions to create economic development incentives.

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.

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

Typically included in the sales/use tax base is the purchase of computer and cell phone equipment by a large consulting firm that is incorporated in the state.

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

In determining a corporation's taxable income for state income tax purposes, which of the following does not constitute a subtraction from Federal income?

Allocation is a method under which a corporation's _________________________ income is directly assigned to the specific states where the income is derived.

By making a water's edge election, the multinational taxpayer can limit the reach of unitary principles to the apportionment factors and income of its U.S.and E.U.affiliates.

State and local politicians tend to apply new and increased taxes to taxpayers who are visitors to the jurisdiction, such as a tax on auto rentals, because the taxpayer cannot vote to reelect the lawmaker.

A typical state taxable income addition modification is the interest income from U.S.Treasury bonds.

Given the following transactions for the year, determine Comp Corporation's D payroll factor denominator.State D has adopted the principles of UDITPA.

Britta Corporation's entire operations are located in State A. Eighty percent ($800,000) of Britta's sales are made in A and the remaining sales ($200,000) are made in State B. B has not adopted a corporate income tax. If A has adopted a throwback rule, the numerator of Britta's A sales factor is:

Under the UDITPA's ____________________ concept, sales are assumed to take place at the point of delivery, as opposed to the location at which the shipment originates.