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Exam 24: Multistate Corporate Taxation

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Question 21

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A state sales tax usually falls upon:

A) Sales of groceries.
B) Sales made to out-of-state customers.
C) Sales made to the U.S. Department of Education.
D) Sales made to the ultimate consumer of the product or service.

E) A) and D)
F) A) and C)

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Question 22

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Milt Corporation owns and operates two facilities that manufacture paper products.One of the facilities is located in State D,and the other is located in State E. E does not distinguish between business and nonbusiness property. D apportions business income. Milt's activities within the two states are outlined below. E. Milt generated $1,200,000 of taxable income, comprised of $1,000,000 of income from its manufacturing facilities and a $200,000 gain from the sale of nonbusiness property located in

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Both D and E utilize a three-factor appo...

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Question 23

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Dott Corporation generated $300,000 of state taxable income from selling its mapping software in States A and B. Both states utilize a three-factor apportionment formula which equally weights sales, property, and payroll. The rates of corporate income tax imposed in A and B are 7% and 10%, respectively. Determine Dott's state income tax liability. B. For the taxable year, the corporation's activities within the two states were as follows. Dott has determined that it is subject to tax in both A and

The corporate income tax provides about 5 percent of the annual tax revenues for the typical U.S.state.

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

When a _________________________ is in effect,out-of-state sales that are not subject to tax in the destination state are pulled back into the sales factor numerator of the origination state.

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. Z utilizes a double-weighted sales factor in its three-factor apportionment formula.How much of José's taxable income is apportioned to Z?

Politicians use tax devices to create economic development incentives.

General Corporation is taxable in a number of states.This year,General made a $100,000 sale from its A headquarters to an agency of the U.S.government.State A applies a throwback rule.In which state(s) will the sale be included in the sales factor numerator?

A ____________________ tax is designed to complement the local sales tax structure,to prevent the consumer from making purchases in another,lower-tax state.

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 in-state realty.

Valdez Corporation,a calendar-year taxpayer,owns property in States M and O.Both M and O require that the average value of assets be included in the property factor.M requires that the property be valued at its historical cost,and O requires that the property be included in the property factor at its net depreciated book value. Valdez's O property factor is:

A service engineer spends 60% of her time maintaining the employer's productive business property and 40% maintaining the employer's nonbusiness rental properties.This year,her compensation totaled $90,000.The payroll factor assigns $54,000 to the state in which the employer is based.

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

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?

Overall tax liabilities typically ____________________ (increase/decrease)if the members of a unitary group begin to include affiliates that generate net operating losses.

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

Usually a business chooses a location where it will build a new plant based chiefly on tax considerations.

Cruz Corporation owns manufacturing facilities in States A,B,and C.A uses a three-factor apportionment formula under which the sales,property and payroll factors are equally weighted.B uses a three-factor apportionment formula under which sales are double-weighted.C employs a single-factor apportionment factor,based solely on sales. Cruz's operations generated $1,000,000 of apportionable income,and its sales and payroll activity and average property owned in each of the three states is as follows. Cruz's apportionable income assigned to C is:

Your supervisor has shifted your responsibilities from the Federal corporate income tax to a multistate corporate income tax practice.On which issues,if any,are the tax bases and procedures likely to overlap?