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Exam 23: State and Local Taxes

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Question 61

Multiple Choice

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Which of the following states is not asserting economic nexus?

A) New York with the Amazon rule.
B) South Carolina in the Geoffrey case.
C) West Virginia in the MBNA case.
D) Wisconsin in Wrigley.

E) A) and B)
F) A) and C)

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Question 62

Multiple Choice

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Which of the following activities will create sales tax nexus?

A) Advertising using television commercials.
B) Salesmen who only take orders.
C) Delivery of sales by UPS.
D) Electronic delivery of softwarE.Salesmen create the physical presence required for nexus.

E) A) and B)
F) A) and C)

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Question 63

Multiple Choice

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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?

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?

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. The Shop sells, manufacturers, and customizes tennis racquets for serious amateurs. Virginia has a 5 percent sales tax. Determine the sales and use tax liability that the Shop must collect and remit if it sells a $500 racquet to a Tennessee customer that purchases the merchandise in the retail store?

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis Pro sells, manufacturers, and customizes tennis racquets for serious amateurs. Tennis Pro's business has expanded significantly over the last few years. Currently, it has sales personnel in 10 states (Virginia, North Carolina, South Carolina, Georgia, Tennessee, Kentucky, Ohio, Maryland, District of Columbia, New Jersey). All in state activity is limited to solicitation. Orders are taken by the sales team and forwarded to Blacksburg for approval. All orders are sent by common carrier to customers. Tennis Pro owns retail and warehouse space in Virginia and has another warehouse in Kentucky. Is Tennis Pro subject to Ohio's Commercial Activity Tax?

Giving samples and promotional materials without charge is a protected solicitation activity.

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

Commercial domicile is the location where a business is headquartered and from whence it directs its operations.

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

Many states are expanding the types of services subject to sales tax.

All 50 states impose a sales and use tax system.

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?

Business income includes all income earned in the ordinary course of business.

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?

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)