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Exam 23: State and Local Taxes

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Question 41

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Carolina's Hats has the following sales,payroll,and property factors: What is Carolina's Hats North and South Carolina apportionment factors if North Carolina uses an equally weighted three-factor formula and South Carolina uses a double-weighted sales factor formula? (Round your answers to two decimal places.)

A) North Carolina 74.03 percent,and South Carolina 19.45 percent.
B) North Carolina 74.03 percent,and South Carolina 20.22 percent.
C) North Carolina 74.28 percent,and South Carolina 19.45 percent.
D) North Carolina 74.28 percent,and South Carolina 22.51 percent.

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

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Question 42

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The Mobil decision identified three factors to determine whether a group of companies are unitary.

A) True
B) False

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Question 43

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Which of the following is incorrect regarding nondomiciliary businesses?

Hoosier Incorporated is an Indiana corporation.It properly included,deducted,or excluded the following items on its federal tax return in the current year: State depreciation expense was $50,000.Hoosier's federal taxable income was $150,300.Calculate Hoosier's Illinois state tax base.

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

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,and $30,000 of royalty income for an intangible used in Maryland (where income tax nexus exists).Determine how much income is allocated to Virginia.

Which of the following is not a primary revenue source for most states?

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.

Tennis Pro has the following sales,payroll,and property factors: What would Tennis Pro's Virginia and Maryland apportionment factors be if Virginia used a double-weighted sales four-factor method and Maryland used a single-factor sales formula?

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

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

Businesses must collect sales tax only in states where they have sales tax nexus.

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

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

Several states are now moving from a strict physical presence test toward an economic presence test for income taxes.

Bethesda Corporation is unprotected from income tax by Public Law 86-272.Which of the following characteristics creates a problem for Bethesda in states other than Maryland?

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

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

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

Public Law 86-272 protects only companies selling tangible personal property.