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Exam 16: Multistate Corporate Taxation

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Question 71

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A(n)____________________ business operates its separate companies as a whole.It cannot be segregated into independently operating divisions or branches.

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Question 72

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

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sales,property,payro...

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Question 73

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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.

In computing the property factor,property owned by the corporation typically is valued at its ____________________,but without adjusting for depreciation. or

Typically,the state's payroll factor ____________________ (does/does not)include the fringe benefits provided to its sales force.

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

In determining state taxable income,all of the following are adjustments to Federal income except:

Net Corporation's sales office and manufacturing plant are located in State X.Net also maintains a manufacturing plant and sales office in State W.For purposes of apportionment,X defines payroll as all compensation paid to employees,including contributions to § 401(k) deferred compensation plans.Under the statutes of W,neither compensation paid to officers nor contributions to § 401(k) plans are included in the payroll factor.Net incurred the following personnel costs. Net's payroll factor for State W is:

Typical indicators of nexus include the presence of employees based in the state,and the ownership or lease of realty there.

A state or local tax on a corporation's income might be called a franchise tax or a business privilege tax.

Identify some state/local income tax issues facing pass-through entities such as S corporations,partnerships,and LLCs.

If a state follows Federal income tax rules,the state's tax compliance and enforcement become easier to accomplish.

A few states assess a state-level tax on an S corporation that operates in the state.

A typical state taxable income addition modification is the interest income from U.S.Treasury bonds.

When the taxpayer has exposure to a capital stock tax:

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 taxpayer has nexus with a state for sales and use tax purposes if it has a physical presence in the state.

In the broadest application of the unitary theory,the U.S.unitary business files a combined tax return using factors and income amounts for all affiliates:

In most states,a taxpayer's income is apportioned on the basis of a formula measuring the extent of business contact,and allocated according to the location of property owned or used.

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.