Question 1

Match each of the following events, considered independently, to its likely effect on WillCo's various apportionment factors. WillCo is based in Q and has customers in Q, R, and S. To this point, WillCo has not established nexus with S. More than one choice may be correct
-Q adopts a sales-only apportionment formula.

Accepted Answer

The answer of Match each of the following events, considered...

Question 2

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected
a.Taxable
b.Not taxable
-A textbook purchased by a State University student.

Accepted Answer

The answer of Match each of the following items with...

Question 3

Match each of the following events, considered independently, to its likely effect on WillCo's various apportionment factors. WillCo is based in Q and has customers in Q, R, and S. To this point, WillCo has not established nexus with S. More than one choice may be correct
-R adopts an increase in its statutory corporate income tax rates.

Accepted Answer

An increase in R's statutory corporate income tax rates does not directly affect WillCo's apportionment factors, which are based on sales, payroll, and property. These factors are not directly influenced by changes in tax rates.

Question 4

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected
a.Taxable
b.Not taxable
-Prescription drugs and medicines purchased by a consumer.

Accepted Answer

Prescription drugs and medicines purchased by a consumer are generally not taxable in many jurisdictions, as they are considered essential items for health and welfare.

Question 5

Match each of the following items with the appropriate description, in applying the P.L. 86-272 definition of solicitation
-Carrying a free sample of a product to the customer's premises.

Accepted Answer

Carrying a free sample of a product to the customer's premises is considered solicitation under P.L. 86-272, but it does not create nexus.

Question 6

Match each of the following events, considered independently, to its likely effect on WillCo's various apportionment factors. WillCo is based in Q and has customers in Q, R, and S. To this point, WillCo has not established nexus with S. More than one choice may be correct
-Q adopts a throwback rule.

Accepted Answer

The adoption of a throwback rule by Q would result in an increase in Q's apportionment factor since it would attribute more sales to Q. This would not have a direct effect on R or S's apportionment factors unless they also adopt a throwback rule.

Question 7

Match each of the following items with the appropriate description, in applying the P.L. 86-272 definition of solicitation
-Purchasing ads that show up on search-result screens for internet browsers.

Accepted Answer

Purchasing ads that show up on search-result screens for internet browsers is considered solicitation only and does not create nexus according to the P.L. 86-272 definition.

Question 8

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected
a.Taxable
b.Not taxable
-Computing services purchased by a business.

Accepted Answer

Computing services, when purchased by a business, are generally considered a service rather than a tangible good. Most states do not require sales/use tax to be collected on services unless specifically enumerated as taxable.

Question 9

Match each of the following items with the appropriate description, in applying the P.L. 86-272 definition of solicitation
-Checking the customer's inventory to determine whether a reorder is needed.

Accepted Answer

Checking the customer's inventory to determine whether a reorder is needed falls under the P.L. 86-272 definition of solicitation, but it does not create nexus.

Question 10

Match each of the following items with the appropriate description, in applying the P.L. 86-272 definition of solicitation
-Owning a tablet computer that is used on sales trips to the state.

Accepted Answer

Owning a tablet computer that is used on sales trips to the state would be considered solicitation only and would not create nexus, as long as the salesperson using the tablet does not engage in any other activities that create nexus in the state.

Question 11

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected
a.Taxable
b.Not taxable
-Computer software, in the form of a disk purchased by an individual at a rummage sale.

Accepted Answer

Generally, secondhand purchases of tangible personal property such as computer software are not subject to sales/use tax.

Question 12

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected
a.Taxable
b.Not taxable
-A garment purchased by a self-employed actress.

Accepted Answer

Purchases of tangible personal property, such as garments, are generally subject to sales/use tax unless a specific exemption applies. There is no general exemption for purchases made by self-employed individuals for their business, including actors, unless the item is for resale or another specific exemption applies.

Question 13

Match each of the following items with the appropriate description, in applying the P.L. 86-272 definition of solicitation
-Making a decision as to the creditworthiness of customers.

Accepted Answer

Making a decision as to the creditworthiness of customers is more than solicitation and creates nexus under P.L. 86-272.

Question 14

Match each of the following items with the appropriate description, in applying the P.L. 86-272 definition of solicitation
-Operating a warehouse for inventory that is held in the state.

Accepted Answer

Operating a warehouse for inventory that is held in the state goes beyond mere solicitation of sales and therefore creates a nexus with the state, making the business subject to state taxes and regulations.

Question 15

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected
a.Taxable
b.Not taxable
-A new auto purchased in Europe and shipped by the driver to her home state in the U.S.

Accepted Answer

The answer of Match each of the following items with...

Question 16

Match each of the following events, considered independently, to its likely effect on WillCo's various apportionment factors. WillCo is based in Q and has customers in Q, R, and S. To this point, WillCo has not established nexus with S. More than one choice may be correct
-WillCo completes the construction of production facilities in S.

Accepted Answer

The answer of Match each of the following events, considered...

Question 17

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected
a.Taxable
b.Not taxable
-A garment purchased by an employee for wear at an office job.

Accepted Answer

A garment purchased by an employee for wear at an office job is typically considered taxable. However, exemptions may apply in certain states or situations.

Question 18

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected
a.Taxable
b.Not taxable
-A garment purchased for resale.

Accepted Answer

Items purchased for resale are generally not subject to sales/use tax because the tax is collected from the end user at the point of final sale.

Question 19

Match each of the following items with the appropriate description, in applying the P.L. 86-272 definition of solicitation
-Training administrative personnel to use an update to ordering software.

Accepted Answer

Training administrative personnel to use an update to ordering software goes beyond mere solicitation of orders and involves activities that could establish a business presence in the state, thereby creating nexus according to P.L. 86-272.

Question 20

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected
a.Taxable
b.Not taxable
-Computer equipment purchased by a charity.

Accepted Answer

Computer equipment purchased by a charity is generally exempt from sales/use tax as long as the charity is recognized as tax-exempt by the state.

Quiz 16: Multistate Corporate Taxation

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected a.Taxable b.Not taxable -A textbook purchased by a State University student.

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected a.Taxable b.Not taxable -Prescription drugs and medicines purchased by a consumer.

Match each of the following items with the appropriate description, in applying the P.L. 86-272 definition of solicitation -Carrying a free sample of a product to the customer's premises.

Match each of the following items with the appropriate description, in applying the P.L. 86-272 definition of solicitation -Purchasing ads that show up on search-result screens for internet browsers.

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected a.Taxable b.Not taxable -Computing services purchased by a business.

Match each of the following items with the appropriate description, in applying the P.L. 86-272 definition of solicitation -Checking the customer's inventory to determine whether a reorder is needed.

Match each of the following items with the appropriate description, in applying the P.L. 86-272 definition of solicitation -Owning a tablet computer that is used on sales trips to the state.

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected a.Taxable b.Not taxable -Computer software, in the form of a disk purchased by an individual at a rummage sale.

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected a.Taxable b.Not taxable -A garment purchased by a self-employed actress.

Match each of the following items with the appropriate description, in applying the P.L. 86-272 definition of solicitation -Making a decision as to the creditworthiness of customers.

Match each of the following items with the appropriate description, in applying the P.L. 86-272 definition of solicitation -Operating a warehouse for inventory that is held in the state.

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected a.Taxable b.Not taxable -A new auto purchased in Europe and shipped by the driver to her home state in the U.S.

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected a.Taxable b.Not taxable -A garment purchased by an employee for wear at an office job.

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected a.Taxable b.Not taxable -A garment purchased for resale.

Match each of the following items with the appropriate description, in applying the P.L. 86-272 definition of solicitation -Training administrative personnel to use an update to ordering software.

Match each of the following items with the appropriate description, in determining whether sales/use tax typically must be collected a.Taxable b.Not taxable -Computer equipment purchased by a charity.