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Exam 12: State and Local Taxes

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Question 1

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PWD Incorporated is an Illinois corporation.It properly included,deducted,or excluded the following items on its federal tax return in the current year: PWD's Federal Taxable Income was $100,000.Calculate PWD's Illinois state tax base.

A) $116,000.
B) $130,833.
C) $131,000.
D) $164,333.

E) C) and D)
F) B) and C)

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Question 2

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Moss Incorporated is a Washington corporation.It properly included,deducted,or excluded the following items on its federal tax return in the current year: Moss' Oregon depreciation was $145,500.Moss' Federal Taxable Income was $549,743.Calculate Moss' Oregon state tax base.

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$571,743. $549,743 + $25,750 + $15,000 - $7,500 + $134,250 - $145,500.

Question 3

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What was the Supreme Court's holding in Complete Auto Transit?

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

Businesses subject to income tax in more than one jurisdiction have the right to apportionment.

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

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

Separate return states require each member of a consolidated group with nexus to file their own state tax return.

Tennis Pro,a Virginia Corporation domiciled in Virginia,has the following items of income: $5,000 of dividend income,$15,000 of interest income,$10,000 of rental income from Georgia property,$30,000 of royalty income for an intangible used in Maryland (where nexus exists).Determine how much income is allocated to Virginia.

Which of the items is correct regarding a use tax?

Super Sadie,Incorporated manufactures sandals and distributes them across the southwestern United States.Assume that Super Sadie has sales and use tax nexus in Arizona,California,Colorado,New Mexico,and Texas.Super Sadie has sales as follows: Assume the following sales tax rates: Arizona (6 percent),California (8 percent),Colorado (7 percent),New Mexico (6.5 percent),Oregon (7.25 percent),Texas (8 percent),and Utah (5 percent).What is Super Sadie's total sales and use tax liability? (Round your interim calculations to the nearest whole number)

Gordon operates the Tennis Pro Shop in Blacksburg,Virginia.Tennis Pro has sales as follows: Assume that Tennis Pro's other sales include $150,000 of sales to a federal government entity that was shipped from Virginia to Maryland.What is Tennis Pro's Virginia sales numerator and sales factor?

A unitary return includes only companies included in the federal consolidated tax return filing.

A state's apportionment formula usually is applied using some variation of sales,payroll,and property factors.

Federal/state adjustments correct for differences between two states tax laws.

Most services are sourced to the state where the services were performed.

Roxy operates a dress shop in Arlington,Virginia.Roxy also ships dresses nationwide upon request.Roxy's Virginia sales are $1,000,000 and out of state sales are $200,000.Assuming that Virginia's sales tax rate is 5 percent,what is Roxy's Virginia sales and use tax liability?

Lefty provides demolition services in several southern states.Lefty has property as follows: Lefty is a Mississippi Corporation.Lefty also rents property in Mississippi and Tennessee with annual rents of $50,000 and $15,000,respectively.What is Lefty's Mississippi property numerator? (Round your answer to the nearest whole number)

Roxy operates a dress shop in Arlington,Virginia.Lisa,a Maryland resident,comes in for a measurement and purchases a $1,500 dress.Lisa returns to Virginia a few weeks later to pick up the dress and drive it back to her Maryland residence where she will use the property.Assuming that Virginia's sales tax rate is 5 percent and that Maryland's sales tax rate is 6 percent,what is Roxy's sales and use tax liability?

The sales and use tax base varies from state to state.