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Exam 24: Multistate Corporate Taxation

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Question 31

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For most taxpayers, which of the traditional apportionment factors yields the greatest opportunities for tax reduction?

A) Payroll.
B) Property.
C) Sales (gross receipts) .
D) Unitary.

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

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Question 32

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The typical local property tax falls on both an investor's real estate and her stock portfolio.

A) True
B) False

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Question 33

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All of the U.S.states use an apportionment formula based on the sales, property, and payroll factors.

A state sales tax usually falls upon:

Given the following transactions for the year, determine Comp Corporation's D payroll factor denominator.State D has adopted the principles of UDITPA.

In most states, Federal S corporations must make a separate state-level election of the flow-through status.

Although apportionment formulas vary among jurisdictions, most states use the same three factors in the formula.The factors are ____________________, ____________________, and ____________________. or or

In determining taxable income for state income tax purposes, the Federal NOL deduction typically constitutes a(n) ____________________ modification.

You are preparing to make a presentation to a client who has some familiarity with state income tax rules. At a general level, list for the client the principles of multistate tax planning.

In some states, an S corporation must withhold Federal income tax for its shareholders who ____________________ (are/are not) state residents.

Typically included in the sales/use tax base is the purchase of computer and cell phone equipment by a large consulting firm that is incorporated in the state.

Discuss how a multistate business divides up its corporate taxable income among the states in which it operates. Hint: use the terms allocation and apportionment in your comments.

A state wants to increase its income tax collections, but politically it would be unwise to raise taxes on in-state individuals or businesses. Identify some changes to the income tax apportionment formula that would shift the scheduled income tax increases to out-of-state businesses.

Valdez Corporation, a calendar-year taxpayer, owns property in States M and O.Both M and O require that the average value of assets be included in the property factor.M requires that the property be valued at its historical cost, and O requires that the property be included in the property factor at its net depreciated book value. Valdez's O property factor is:

Under the UDITPA's ____________________ concept, sales are assumed to take place at the point of delivery, as opposed to the location at which the shipment originates.

A state sales tax usually falls upon:

Judy, a regional sales manager, has her office in State X.Her region includes several states, as indicated in the sales report below.Determine how much of Judy's $200,000 compensation is assigned to the payroll factor of State X.

Double weighting the sales factor effectively increases the tax burden on taxpayers based in the state, such as corporations with in-state headquarters.

Node Corporation is subject to tax only in State X.Node generated the following income and deductions.State income taxes are not deductible for X income tax purposes.

In most states, medical services are exempt from the sales/use tax base.