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Exam 23: State and Local Taxes

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Question 31

True/False

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

A) True
B) False

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Question 32

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

A) True
B) False

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Question 33

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

Della Corporation is headquartered in Carlisle, Pennsylvania. Della has a Pennsylvania state income tax base of $425,000. Of this amount, $75,000 was nonbusiness income. Della's Pennsylvania apportionment factor is 28.52 percent. The nonbusiness income allocated to Pennsylvania was $61,000. Assuming a Pennsylvania corporate tax rate of7.75 percent, what is Della's Pennsylvania state tax liability? (Round your answer to the nearest whole number)

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

What was the Supreme Court's holding in National Bellas Hess?

Which of the following activities will create sales tax nexus?

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?

Discuss the steps necessary to determine whether a sales or use tax applies and how the tax is collected.

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis Pro has payroll as follows: The other total includes $10,000 of salary of a Virginia employee that works part time in another state. What isTennis Pro's Virginia payroll numerator and payroll factor?

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

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

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis pro decides to expand into Pennsylvania during the current year and try some new sales techniques. Tennis pro advertises on local radio and television as well as national tennis magazines sent into PA. Salesmen give away promotional materials and occasionally sell demonstration models to local shop employees to build goodwill for Tennis Pro. It holds sales meetings at rented space in local hotels. Personneloccasionally fix minor problems such as tape and strings without charge. One employee performed a credit check for a major account who needed merchandise immediately. Each sales person isallowed an allowance for a car and office equipment to be maintained in an in-home office. Do any of Tennis Pro activities have the potential to create income tax nexus?

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

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?

Physical presence does not always create sales and use tax nexus.

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

Mighty Manny, Incorporated manufactures ice scrapers and distributes them across the midwestern United States. Mighty Manny is incorporated and headquartered in Michigan. It has product sales to customers in Illinois, Indiana, Iowa, Michigan, Minnesota, Wisconsin, and Wyoming. It has sales personnel only where discussed.Determine the state in which Mighty Manny does not have sales and use tax nexus given the following scenarios:

All of the following are false regarding apportionment except?

Which of the following is true regarding state and local taxes?