Question 1

Almost all of the states allow treatment to an LLC for income tax purposes.

Accepted Answer

The answer of Almost all of the states allow treatment...

Question 2

If a gift card is unused after a specified period of time, the state can collect the amount of the card proceeds from the seller as ____________________ property.

Accepted Answer

The answer of If a gift card is unused after...

Question 3

Match each of the following terms with the appropriate description in the state income tax formula. Apply the
UDITPA rules in your responses.
-Federal depreciation deduction in excess of state amount.

Accepted Answer

Federal depreciation deductions that exceed the state amount are added back to the income, thus they are considered an addition modification under UDITPA rules. This adjustment ensures that the state taxable income reflects the appropriate state depreciation rules.

Question 4

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

Solicitation only, no nexus created.

Question 5

A tax is designed to complement the local sales tax structure, to prevent the consumer from making no- or low-tax purchases in another state, outside the United States, or online and then bringing the asset into the state.

Accepted Answer

The answer of A tax is designed to complement the...

Question 6

Match each of the following terms with the appropriate description in the state income tax formula. Apply the
UDITPA rules in your responses.
-State income tax expense.

Accepted Answer

Addition modification refers to adjustments made to federal taxable income to arrive at state taxable income, often adding back items like state and local taxes deducted federally.

Question 7

Match each of the following terms with the appropriate description in the state income tax formula. Apply the
UDITPA rules in your responses.
-Deduction for advertising expenditures.

Accepted Answer

Under UDITPA rules, advertising expenditures typically do not require a modification in the state income tax formula, so they are not added or subtracted.

Question 8

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 used on sales trips to the state is considered as part of the solicitation process. Under P.L. 86-272, activities that are strictly limited to solicitation of orders for sales of tangible personal property, which are approved and fulfilled from outside the state, do not create nexus. Therefore, using a tablet for sales activities falls under the protection of P.L. 86-272, assuming all sales activities are limited to solicitation.

Question 9

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 considered more than solicitation and therefore creates nexus because it involves activities beyond merely requesting orders for sales, which can establish a taxable presence in the state.

Question 10

Typically, a sales/use tax is applied to a retail sale of property.

Accepted Answer

The answer of Typically, a sales/use tax is applied to...

Question 11

A state sales/use tax is designed to be collected by the (seller/purchaser) of the product and then remitted to the state.

Accepted Answer

The answer of A state sales/use tax is designed to...

Question 12

Match each of the following terms with the appropriate description in the state income tax formula. Apply the
UDITPA rules in your responses.
-Dividend income from P & G stock held.

Accepted Answer

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

Question 13

Match each of the following terms with the appropriate description in the state income tax formula. Apply the
UDITPA rules in your responses.
-Federal general business credit.

Accepted Answer

The federal general business credit does not require any modification under the UDITPA rules for state income tax purposes.

Question 14

A state might levy a(n) tax when an investor sells shares of stock.

Accepted Answer

The answer of A state might levy a(n) tax when...

Question 15

The sale of groceries to an individual probably is exempt from sales/use tax under the
_________________________ rule.

Accepted Answer

The answer of The sale of groceries to an individual...

Question 16

The tax levied by a state usually is based on the book value of a corporation's net worth.

Accepted Answer

The answer of The tax levied by a state usually...

Question 17

Match each of the following terms with the appropriate description in the state income tax formula. Apply the
UDITPA rules in your responses.
-State-level NOL.

Accepted Answer

State-level NOL (Net Operating Loss) is typically treated as a subtraction modification in the state income tax formula under UDITPA rules, allowing businesses to reduce their taxable income by the amount of the loss carried forward from previous years.

Question 18

Match each of the following terms with the appropriate description in the state income tax formula. Apply the
UDITPA rules in your responses.
-Treasury bond interest income.

Accepted Answer

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

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

The tax usually is applied at the city or county level as its main source of revenue.

Accepted Answer

The answer of The tax usually is applied at the...

Quiz 24: Multistate Corporate Taxation

Almost all of the states allow treatment to an LLC for income tax purposes.

If a gift card is unused after a specified period of time, the state can collect the amount of the card proceeds from the seller as ____________________ property.

Match each of the following terms with the appropriate description in the state income tax formula. Apply the UDITPA rules in your responses. -Federal depreciation deduction in excess of state amount.

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.

A tax is designed to complement the local sales tax structure, to prevent the consumer from making no- or low-tax purchases in another state, outside the United States, or online and then bringing the asset into the state.

Match each of the following terms with the appropriate description in the state income tax formula. Apply the UDITPA rules in your responses. -State income tax expense.

Match each of the following terms with the appropriate description in the state income tax formula. Apply the UDITPA rules in your responses. -Deduction for advertising expenditures.

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 applying the P.L. 86-272 definition of solicitation. -Making a decision as to the creditworthiness of customers.

Typically, a sales/use tax is applied to a retail sale of property.

A state sales/use tax is designed to be collected by the (seller/purchaser) of the product and then remitted to the state.

Match each of the following terms with the appropriate description in the state income tax formula. Apply the UDITPA rules in your responses. -Dividend income from P & G stock held.

Match each of the following terms with the appropriate description in the state income tax formula. Apply the UDITPA rules in your responses. -Federal general business credit.

A state might levy a(n) tax when an investor sells shares of stock.

The sale of groceries to an individual probably is exempt from sales/use tax under the _________________________ rule.

The tax levied by a state usually is based on the book value of a corporation's net worth.

Match each of the following terms with the appropriate description in the state income tax formula. Apply the UDITPA rules in your responses. -State-level NOL.

Match each of the following terms with the appropriate description in the state income tax formula. Apply the UDITPA rules in your responses. -Treasury bond interest income.

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.

The tax usually is applied at the city or county level as its main source of revenue.