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Exam 23: State and Local Taxes

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Question 31

True/False

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All states employ some combination of sales and use tax,income or franchise tax,or property tax to fund their government operations.

A) True
B) False

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Question 32

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

A) Includes salaries,commissions,and bonuses.
B) Excludes compensation to independent contractors.
C) Allocates compensation for employees working in more than one state.
D) Assigns the payroll of each employee to a single state.

E) A) and D)
F) A) and C)

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Question 33

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Failure by a seller to collect and remit sales taxes often results in a larger tax liability than failure to pay income taxes.

Which of the following sales is always subject to sales and use tax in a state that assesses a sales and use tax?

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

Public Law 86-272 protects certain business activities from creating income tax nexus.

Mighty Manny,Incorporated,manufactures and services deli machinery and distributes it across the United States.Mighty Manny is incorporated and headquartered in New Jersey.It has sales tax nexus in Connecticut,New Jersey,New York,Pennsylvania,Rhode Island,and South Carolina.Mighty Manny has sales as follows: Assume the following sales tax rates: Connecticut (6.75 percent),New Jersey (7.5 percent),New York (8.5 percent),Pennsylvania (6.5 percent),Rhode Island (7.25 percent),and South Carolina (5.5 percent).Assume that Connecticut also taxes Mighty Manny's services.What is Mighty Manny's total sales and use tax liability?

The Wrigley case held that the sale of intangibles is protected by Public Law 86-272.

Roxy operates a dress shop in Arlington,Virginia.Roxy also ships dresses nationwide upon request.Roxy's Virginia sales are $1,000,000 and out-of-state sales are $200,000.Assuming that Virginia's sales tax rate is 5 percent,what is Roxy's Virginia sales and use tax liability?

The state tax base is computed by making adjustments to federal taxable income.

Rental income is allocated to the state of commercial domicile.

Wacky Wendy produces gourmet cheese in Wisconsin.Wendy has sales as follows: Wendy is a Wisconsin corporation and has the following operations: Wendy has income tax nexus in Iowa,Minnesota,and Wisconsin.The Michigan sales are shipped from Wisconsin (a throwback state) .$100,000 of the Wisconsin sales were to the federal government.What is Wendy's Wisconsin sale numerator?

What was the Supreme Court's holding in Wayfair?

Businesses must pay income tax in their state of commercial domicile.

On which of the following transactions should sales tax generally be collected?

Super Sadie,Incorporated,manufactures sandals and distributes them across the southwestern United States.Assume that Super Sadie has sales 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.)

Tennis Pro has the following sales,payroll,and property factors: What are Tennis Pro's Virginia and Maryland apportionment factors if both states use an equally weighted three-factor formula?

Businesses engaged in interstate commerce are subject to income tax in every state in which they operate.

The Wayfair decision reversed the Quill decision,which had affirmed 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.

In which of the following state cases did the state not assert economic income tax nexus?