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Exam 23: State and Local Taxes

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Question 31

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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?

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$233,626.
Explanation: ($398,4...

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Question 32

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Which of the items is correct regarding a use tax?

A) Use taxes are imposed by every state.
B) Use taxes only apply when the seller is not required to collect the sales tax.
C) Amazon collects use taxes on behalf of all its resellers.
D) States choose to implement either a sales tax or a use tax.

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

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Question 33

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What was the Supreme Court's holding in Quill?

Super Sadie, Incorporated manufactures sandals and distributes them across the southwestern United States. Super Sadie is incorporated and headquartered in Arizona. It has product sales to customers in Arizona, California, Colorado, New Mexico, Oregon, Texas, and Utah. It has sales personnel in California, Colorado, and New Mexico. It also owns an office building in Arizona and a Warehouse in Texas. Determine the states in which Super Sadie has sales and use tax nexus.

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

Purchases of inventory for resale are typically exempt from sales and use taxes.

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' Oregon depreciation was $145,500. Moss' Federal Taxable Income was $549,743. Calculate Moss' Oregon state tax base.

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

Several states are now moving towards economic nexus.

The primary purpose of state and local taxes is to raise revenue to finance state and local government.

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. 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 liability?

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

A state's apportionment formula usually relies on some variation of sales, payroll, and property factors.

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

The annual value of rented property is not included in the property factor.

Hoosier Incorporated is an Indiana corporation. It properly included, deducted, or excluded the following items on its federal tax return in the current year: State depreciation expense was $50,000. Hoosier's Federal Taxable Income was $150,300. Calculate Hoosier's Illinois state tax base.

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?

All of the following are false regarding apportionment except:

State tax law is comprised solely of legislative authority.

Nondomiciliary businesses are subject to tax everywhere they do business.