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Exam 23: State and Local Taxes

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Question 31

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Which of the following is not one of the Complete Auto Transit's criteria for whether a state can tax nondomiciliary companies?

A) Protected activities are exempt.
B) A sufficient connection exists.
C) Only a fair portion of income can be taxed.
D) Tax cannot discriminate against nondomiciliary businesses.

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

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Question 32

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Mahre, Incorporated, a New York corporation, runs ski tours in several states. Mahre also has a New York retail store and an Internet store, which ships to out-of-state customers. The ski tours operate in Maine, New Hampshire, and Vermont, where Mahre has employees and owns and uses tangible personal property. Mahre has real property only in New York. Mahre has the following sales: Assume the following sales tax rates: Alaska (0 percent) , Colorado (7.75 percent) , Maine (8.5 percent) , New Hampshire (6.75 percent) , New York (8 percent) , and Vermont (5 percent) . How much sales and use tax must Mahre collect and remit in Maine?

A) $0
B) $3,053
C) $13,267
D) $16,319

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

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Question 33

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Moss Incorporated is a Washington corporation. It properly included, deducted, or excluded the following items on its federal tax return in the current year: Moss's Oregon depreciation was $145,515. Moss's federal taxable income was $549,773. Assuming Oregon taxes all municipal bond interest, calculate Moss's Oregon state tax base.

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 asin national tennis magazines sent into Pennsylvania. Salespeople give away promotional materials and occasionally sell demonstration models to local shop employees to build goodwill for Tennis Pro. Tennis Pro holds sales meetings at rented space in local hotels. Personnel occasionally fix minor problems such as tape and strings without charge. One employee performed a credit check for a major account that needed merchandise immediately. Each salesperson is allowed an allowance for a car and office equipment to be maintained in an in-home office. Do any of Tennis Pro's activities have the potential to create income tax nexus?

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis Pro has payroll as follows: The other total includes $28,000 of salary of a Virginia employee that works part time in another state. What is Tennis Pro's Virginia payroll numerator and payroll factor? (Round the payroll factor to two places.)

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis Pro has sales as follows: Assume that Tennis Pro's other sales include $152,000 of sales to a federal government entity that were shipped from Virginia to Maryland. What is Tennis Pro's Virginia sales numerator and sales factor? (Round the sales factor to two decimal places.)

Wacky Wendy produces gourmet cheese in Wisconsin. Wendy has sales as follows: Wendy is a Wisconsin corporation and has the following operations: Wendy hasincome tax nexus in Iowa, Minnesota, and Wisconsin. The Michigan sales are shipped from Wisconsin (a throwback state) . $101,200 of the Wisconsin sales were to the federal government. What is Wendy's Wisconsin sale numerator?

Assume Tennis Pro attends a sports equipment expo in Washington state. Assume this activity creates nexus for the Business & Occupation (B&O)tax. Assume the tax is 0.5percent of gross receipts for retailers and 1.5percent 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.

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. The shop sells, manufactures, and customizes tennis racquets for serious amateurs. Virginia has a 5 percent sales tax. Assume that a District of Columbia customer picks up a $2,000 racquet order in the Blacksburg store and drives it back to the District of Columbia (where the sales tax rate is 8.5 percent). Determine the sales and use tax liabilityof the customer. (Assume the shop has no sales personnel or property in District of Columbia, and District of Columbia sales don't exceed the Wayfair thresholds.)

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, Michigan, Minnesota, and Wisconsin. It has sales personnel only in the states discussed and all these states have adopted Wayfair legislation. Determine the state in which Mighty Manny does not have sales and nexus given the following scenarios:

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

Which of the following isn't a typical federal/state adjustment?

Mahre, Incorporated, a New York corporation, runs ski tours in a several states. Mahre also has a New York retail store and an Internet store, which ships to out-of-state customers. Assume sales transactions in all states, except New York, are under 200 and that all states have adopted Wayfair legislation. The ski tours operate in Maine, New Hampshire, and Vermont, where Mahre has employees and owns and uses tangible personal property. Mahre has real property only in New York. Mahre has the following sales: Assume the following sales tax rates: Alaska (0 percent) , Colorado (7.75 percent) , Maine (8.5 percent) , New Hampshire (0 percent) , New York (8 percent) , and Vermont (5 percent) . How much sales and use tax must Mahre collect and remit?

The payroll factor includes payments to independent contractors.

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

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?

Immaterial violations of the solicitation rules automatically create income tax nexus.

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

The property factor is generally calculated as being the average of the beginning and ending property values.

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