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Exam 12: State and Local Taxes

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Question 61

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

A) True
B) False

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Question 62

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

A) True
B) False

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Question 63

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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. Arizona has a 6 percent sales tax, but Arizona sales thresholds don't exceed the Wayfair limits. Determine the sales tax liability that the shop must collect and remit if it sells a $1,000 racquet order to an Arizona customer (assume the shop has no sales personnel or property in Arizona) that purchases the merchandise from the Virginia store over the internet?

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

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

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

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?

Tennis Pro is headquartered in Virginia. Assume it has a state income tax base of $200,000. Of this amount, $60,000 was nonbusiness income. Assume that Tennis Pro's Virginia apportionment factor is 73.28 percent. The nonbusiness income allocated to Virginia was $23,000. Assuming a Virginia corporate tax rate of 5.5 percent, what is Tennis Pro's Virginia stateincome tax liability? (Round your answer to the nearest whole number.)

Wyoming imposes an income tax on corporations.

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?

Which of the following activities will create sales tax nexus?

Roxy operates a dress shop in Arlington, Virginia. Roxy also ships dresses nationwide upon request. Roxy's Virginia sales are $1,900,000 and out-of-state sales are $218,000. Assuming that Virginia's sales tax rate is 5 percent, what is Roxy's Virginia sales and use tax collection obligation?

Public Law 86-272 protects solicitation from income taxation. Which of the following activities exceeds the solicitation threshold?

Most services are sourced to the state where the services were performed.