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Exam 23: State and Local Taxes

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Question 1

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Della Corporation is headquartered in Carlisle, Pennsylvania. Della has a Pennsylvania state income tax base of $427,000. Of this amount, $75,400 was nonbusiness income. Della's Pennsylvania apportionment factor is 28.52 percent. The nonbusiness income allocated to Pennsylvania was $61,200. Assuming a Pennsylvania corporate tax rate of 7.75 percent, what is Della's Pennsylvania state tax liability? (Round your answer to the nearest whole number.)

A) $8,861
B) $9,124
C) $12,514
D) $13,599

E) C) and D)
F) None of the above

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Question 2

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Interest and dividends are allocated to the state of commercial domicile.

A) True
B) False

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Question 3

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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.)

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis Pro has property as follows: What is Tennis Pro's Virginia property numerator and property factor? (Round the property factor to two places.)

Which of the following is not a general rule for calculating the payroll factor?

Roxy operates a dress shop in Arlington, Virginia. Roxy also ships dresses nationwide upon request. Roxy's Virginia sales are $1,500,000 and out-of-state sales are $210,000. Assuming that Virginia's sales tax rate is 5 percent, what is Roxy's Virginia sales and use tax collection obligation?

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 $29,600 of Washington retail sales and $1,000 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 $3,400 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 of 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.)

Most state tax laws adopt the federal tax law as of a specific date in time.

Which of the following law types is not a primary authority source?

Delivery of tangible personal property through common carrier is a protected activity.

Business income is allocated to the state of commercial domicile.

Tennis Pro is headquartered in Virginia. Assume it has a Kentucky state income tax base of $260,000. Of this amount, $48,000 was nonbusiness income. Assume that Tennis Pro's Kentucky sales, payroll, and property apportionment factor are 11, 4, and 5 percent, respectively. Assume that Kentucky uses a single-factor sales formula apportionment method. The nonbusiness income allocated to Kentucky was $5,000. Assuming Kentucky's corporate tax rate is 6 percent, what is Tennis Pro's Kentucky state income tax liability?

Gordon operates the Tennis Pro Shop in Blacksburg, Virginia. Tennis Pro has property as follows: What is Tennis Pro's Virginia property numerator and property factor? (Round the property factor to two places.)

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

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

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

Handsome Rob provides transportation services in several western states. Rob has payroll as follows: Rob is a California corporation and the following is true: Rob hasincome tax nexus in Arizona, California, Nevada, and Washington. The Washington drivers spend 25 percent of their time driving through Oregon. California payroll includes $201,400 of payroll for services provided in Nevada by California-based drivers. What is Rob's California payroll numerator?

Use tax liability accrues in the state where taxable purchased property will be used when the seller of the property is not required to collect sales tax.

Federal/state adjustments correct for differences between two states' tax laws.