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Exam 23: State and Local Taxes

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Question 51

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A gross receipts tax is subject to Public Law 86-272.

A) True
B) False

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Question 52

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

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$20,000. $5,000 of d...

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Question 53

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Which of the following businesses is likely to have taxable sales for purposes of sales and use tax?

Which of the items is correct regarding a use tax?

Roxy operates a dress shop in Arlington, Virginia. Lisa, a Maryland resident, comes in for a measurement and purchases a $1,500 dress that is shipped to her Maryland residence using a common carrier. Roxy's total Maryland sales are $20,000 on 15 transactions. Assuming that Virginia's sales tax rate is 5 percent and that Maryland's sales tax rate is 7 percent, what is Roxy's sales and use tax collection obligation?

Businesses must collect sales tax only in states where they have sales tax nexus.

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

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

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis Pro has property as follows: Tennis Pro also rents Virginia property at an annual rent of $24,000. What is Tennis Pro's Virginia property numerator and property factor? (Round interim calculations to the nearest whole number and the property factor to two decimal places.)

Separate-return states require each member of a consolidated group with income tax nexus to file their own state income tax return.

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. Tennessee has a 4 percent sales tax. Determine the sales and use tax liability that the shop must collect and remit if it sells a $500 racquet to a Tennessee resident that purchases the merchandise in the Virginia retail store?

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

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

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

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

What was the Supreme Court's holding in Complete Auto Transit?

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?

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis Pro has sales as follows: Assume that Tennis Pro's other sales include $150,000 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.)

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. Tennessee has a 4 percent sales tax. Determine the sales and use tax liability that the shop must collect and remit if it sells a $700 racquet to a Tennessee resident that purchases the merchandise in the Virginia retail store?

All 50 states impose a sales and use tax system.