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Exam 23: State and Local Taxes

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Question 21

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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 factorformula? (Round your answers to two decimal places) .

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

E) None of the above
F) A) and B)

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Question 22

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Which of the following is not a general rule for allocating nonbusiness income?

A) Interest and dividends to the state of commercial domicile.
B) Rental income for investment property to state of commercial domicile.
C) Capital gains from rental property to state where property is located.
D) Rental income for business property to state where property is located.

E) A) and D)
F) A) and B)

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Question 23

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A state's apportionment formula divides nonbusiness income among the states where nexus exists.

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

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?

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

Nondomiciliary businesses are subject to tax everywhere they do business.

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 sales activity in all of these states 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. Where does Tennis Pro have income tax nexus?

Which of the following statements regarding income tax commercial domicile is incorrect?

Delivery of tangible personal property through common carrier is a protected activity.

Sales personnel investigating a potential customer's credit worthiness generally are deemed to exceed protected boundaries of solicitation.

Assume Tennis Pro attends a sports equipment expo in Washington State. Assume this activitycreates nexus of the Business and Occupation (B&O) tax. Assume the tax is 0.5% of gross receipts for retailers and 1.5% of gross receipts on services. If Tennis Pro has $20,000 of Washington retail sales and $2,000 of services performed, calculate Tennis Pro's B&O tax.

The payroll factor includes payments to independent contractors.

A unitary return includes only companies included in the federal consolidated tax return filing.

The National Bellas Hess decision held that an out-of-state mail-order company did not have sales tax collection responsibility because it lacked physical presence.

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, andTexas. 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)

Business income is allocated to the state of commercial domicile.

Which of the items is correct regarding a use tax?

Rental income is allocated to the state of commercial domicile.

Which of the following isn't a criteria used to determine whether a unitary relationship exists?