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Exam 12: State and Local Taxes

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Question 41

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

A) True
B) False

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Question 42

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

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B) False

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Question 43

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Purchases of inventory for resale are typically exempt from sales and use taxes.

Which of the following businesses is likely to have taxable sales for purposes of sales and use tax?

Which of the following activities will create sales tax nexus?

A state's apportionment formula divides nonbusiness income among the states where nexus exists.

The Quill decision reaffirmed that out-of-state businesses must have physical presence within a state before the state may require the collection of sales taxes from in-state customers.

The property factor is generally calculated as being the average of the beginning and ending property values.

Most states have shifted away from an equally weighted three-factor to a heavily-weighted sales apportionment formula.

The primary purpose of state and local taxes is to raise revenue to finance state and local government.

In Complete Auto Transit the court determined eight criteria for determining whether a state can tax a nondomiciliary company.

In recent years,states are weighting the sales factor because it is easier to calculate.

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)

Which of the following is not one of the Complete Auto Transit's criteria for whether a state can tax nondomiciliary companies?

Which of the following is an income based tax?

Mighty Manny,Incorporated manufactures ice scrapers and distributes them across the Midwestern United States.Mighty Manny is incorporated and headquartered in Michigan.It has product sales to customers in Illinois,Indiana,Iowa,Michigan,Minnesota,and Wisconsin.It has sales personnel only where discussed.Determine the state in which Mighty Manny does not have sales and use tax nexus given the following scenarios:

Which of the following isn't a requirement of Public Law 86-272?

Public Law 86-272 was a congressional response to Northwestern States Portland Cement.

Handsome Rob provides transportation services in several western states.Rob has sales as follows: Rob is a California Corporation and has the following facts. Rob has nexus in Arizona,California,Nevada,and Washington.The Washington drivers spend 25 percent of their time driving through Oregon.California payroll includes $200,000 of payroll for services provided in Nevada by California based drivers.What is Rob's California sale numerator?

Which of the following statements regarding income tax commercial domicile is incorrect?