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Exam 24: Multistate Corporate Taxation

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Question 51

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

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Question 52

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Almost all of the states assess some form of consumer-level sales/use tax.

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B) False

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Question 53

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

Typically exempt from the sales/use tax base is the purchase of clothing from a neighbor's "garage sale."

If a state follows Federal income tax rules,the state's tax compliance and enforcement become easier to accomplish.

Several states allow the S corporation to file a(n) ____________________ income tax return,usually in the form of a state-by-state spreadsheet,on behalf of its out-of-state shareholders.

​Application of the unitary principle generally works to the taxpayer's benefit when:

Adams Corporation owns and operates two manufacturing facilities,one in State X and the other in State Y.Due to a temporary decline in the corporation's sales,Adams has rented 20% of its Y facility to an unaffiliated corporation.Adams generated $1,000,000 net rental income and $5,000,000 income from manufacturing. ​ Adams is incorporated in Y.For X and Y purposes,rental income is classified as allocable nonbusiness income.By applying the statutes of each state,Adams determined that its apportionment factors are .65 for X and .35 for Y. ​ Adams's income attributed to X is:

Typically exempt from the sales/use tax base is the purchase of prescription medicines by an individual.

Condor Corporation generated $450,000 of state taxable income from selling its product in States A and B.For the taxable year,the corporation's activities within the two states were as follows. ​ ​ Condor has determined that it is subject to tax in both A and B.Both states utilize a three-factor apportionment formula that equally weights sales,property,and payroll.The rates of corporate income tax imposed in A and B are 5% and 3%,respectively.Determine Condor's state income tax liability.

​Generally,a taxpayer's business income is:

A service engineer spends 80% of her time maintaining the employer's productive business property,and 20% maintaining the employer's nonbusiness rental properties.This year,her compensation totaled $90,000.The payroll factor assigns $90,000 to the state in which the employer is based.

In most states,legal and accounting services are exempt from the sales/use tax base.

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:

Under common terminology,a unitary group files a ____________________ (combined/consolidated) state income tax return.

In determining taxable income for state income tax purposes,interest income from Federal bonds typically constitutes a(n) ____________________ modification.

José Corporation realized $900,000 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?

​The most commonly used state income tax apportionment formula is: ​

A state sales tax usually falls upon:

Match each of the following events, considered independently, to its likely effect on WillCo's various apportionment factors. WillCo is based in Q and has customers in Q, R, and S. To this point, WillCo has not established nexus with S. More than one choice may be correct. a.No change in apportionment factors b.Q apportionment factor increases c.Q apportionment factor decreases d.R apportionment factor increases e.R apportionment factor decreases f.S apportionment factor increases g.S apportionment factor decreases -Q adopts a sales-only apportionment formula.