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Exam 12: State and Local Taxes

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Question 61

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The payroll factor includes payments to independent contractors.

A) True
B) False

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Question 62

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

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Question 63

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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 received 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.Is Tennis Pro subject to Ohio's Commercial Activity Tax (a non-income based tax)?

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.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 (6.6 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?

Gordon operates the Tennis Pro Shop in Blacksburg,Virginia.The Shop sells,manufacturers,and customizes tennis racquets for serious amateurs.Virginia has a 5 percent sales tax.Alaska has a 6 percent sales tax.Determine the sales and use tax liability that the Shop must collect and remit if it sells a $1,000 racquet order to an Alaska customer (assume the Shop has no sales personnel or property in Alaska)that purchases the merchandise from the Virginia store over the internet?

Public Law 86-272 protects certain business activities from creating income tax nexus.

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

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

Which of the following is incorrect regarding nondomiciliary businesses?

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

Gordon operates the Tennis Pro Shop in Blacksburg,Virginia.The Shop sells,manufacturers,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 liability (assume the Shop has no sales personnel or property in District of Columbia)of the customer?

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?

Giving samples and promotional materials without charge is a protected solicitation activity.

Mighty Manny,Incorporated manufactures and services deli machinery and distributes them across the United States.Mighty Manny is incorporated and headquartered in New Jersey.It has sales and use tax nexus in Connecticut,New Jersey,New York,Pennsylvania,Rhode Island,and South Carolina.Mighty Manny has sales as follows: Assume the following sales tax rates: Connecticut (6.75 percent),New Jersey (7.5 percent),New York (8.5 percent),Pennsylvania (6.5 percent),Rhode Island (7.25 percent),and South Carolina (5.5 percent).Assume that Connecticut also taxes Mighty Manny's services.What is Mighty Manny's total sales and use tax liability?

What was the Supreme Court's holding in Quill?

Tennis Pro is headquartered in Virginia.Assume it has a Kentucky state income tax base of $220,000.Of this amount,$40,000 was non-business income.Assume that Tennis Pro's Kentucky sales,payroll and property apportionment factor are 12,5,and 3 percent,respectively.Assume that Kentucky uses a single-factor sales formula apportionment method.The non-business income allocated to Kentucky was $1,000.Assuming Kentucky's corporate tax rate of 6 percent,what is Tennis Pro's Kentucky state tax liability?

Carolina's Hats has the following sales,payroll and property factors: 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 factor formula? (Round your answers to two decimal places) .