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Exam 16: Multistate Corporate Taxation

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Question 21

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All but a few states have adopted a tax based on net taxable income.

A) True
B) False

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Question 22

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When the taxpayer has exposure to a capital stock tax:

A) Expansions should be funded with retained earnings.
B) Subsidiary operations should be funded through direct capital contributions.
C) Dividends should be paid regularly to a parent based in a low-tax state.
D) Cost of sales should reflect no more than inflation increases.
E) None of the above is true.

F) All of the above
G) C) and D)

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Question 23

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A local business wants your help in making a decision about a large capital investment.The entity has narrowed down the choice to four different locations,based on non-tax factors.How can you help them choose among the four finalists,concentrating on tax issues?

The throwback rule requires that:

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. X utilizes an equally weighted three-factor apportionment formula.How much of José's taxable income is apportioned to X?

Roughly one-fifth of all taxes paid by businesses in the U.S.are to state,local,and municipal jurisdictions.

Flake Corporation's property holdings in State E are as follows. Compute the numerator of Flake's E property factor.

Parent and Junior form a unitary group of corporations.Parent is located in a state with an effective tax rate of 3%,while Junior's effective tax rate is 9%.Acting in concert to reduce overall tax liabilities,the group should:

Compute Quail Corporation's State Q taxable income for the year.

A city might assess a professional occupation tax on an architect.

The use tax is designed to complement the sales tax.A use tax typically covers purchases made out of state and brought into the jurisdiction.

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

A taxpayer has nexus with a state for sales and use tax purposes if it has a physical presence in the state.

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

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?

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

In conducting multistate tax planning,the taxpayer should:

Which of the following is not immune from state income taxation,even if P.L.86-272 is in effect?

Parent and Junior form a non-unitary group of corporations.Parent is located in a state with an effective tax rate of 3%,while Junior's effective tax rate is 9%.Acting in concert to reduce overall tax liabilities,the group should:

In multistate income taxation,the sales factor applies the "ultimate destination concept." Define this term,and identify at least two of its most important exceptions.