Question [LO 3] Explain the difference between separate return st

1. [LO 3] Explain the difference between separate return states and unitary return states.

1. [LO 3] Explain the rationale for the factors (functional integration, centralization of management, and economies of scale) used to determine whether two or more businesses form a unitary group under the Mobil decision.

1. [LO 3] Compare and contrast why book/tax and federal/state adjustments are necessary for interest income.

1. [LO 3] Compare and contrast the differences between how business and non-business income are divided among states for a multi-state business.

1. [LO 3] Discuss differences between the treatment of government sales and dock sales for the sales apportionment factor.

1. [LO 3] Most states have increased the weighting of the sales factor for the apportionment of business income. What are some possible reasons?

1. [LO 3] Compare and contrast federal/state tax differences and book/federal tax differences.

Problems

1. [LO 2] Crazy Eddie, Incorporated manufactures baseball caps and distributes them across the northeastern United States. The firm is incorporated and headquartered in New York and sells to customers in Connecticut, Delaware, Massachusetts, New Jersey, New York, Ohio, and Pennsylvania. It has sales reps only where discussed in the scenarios below. Determine the states in which Crazy Eddie has sales and use tax nexus given the following:

a) Crazy Eddie is incorporated and headquartered in New York. It also has property, employees, salespeople, and intangibles in New York.

b) Crazy Eddie has a warehouse, personal property, and employees in Connecticut.

c) Crazy Eddie has two customers in Delaware. Crazy Eddie receives orders over the phone and ships goods to its Delaware customers using FedEx.

d) Crazy Eddie has independent sales representatives in Massachusetts who distribute baseball-related items for over a dozen companies.

e) Crazy Eddie has salespeople who visit New Jersey. They follow procedures that comply with Public Law 86-272 by sending orders to New York for acceptance. The goods are shipped to New Jersey by FedEx.

f) Crazy Eddie provides graphic design services to another manufacturer located in Ohio. While the services are performed in New York, Crazy Eddie’s designers visit Ohio at least quarterly to deliver the new designs and receive feedback.

g) Crazy Eddie receives online orders from its Pennsylvania clients. Because the orders are so large, the goods are delivered weekly on Crazy Eddie’s trucks.

1. [LO 2] Brad Carlton operates Carlton Collectibles, a rare coin shop in Washington, D.C., that ships coins to collectors in all 50 states. Carlton also provides appraisal service upon request. During the last several years the appraisal work has been done in either the DC shop or at the homes of private collectors in Maryland and Virginia. Determine the jurisdictions in which Carlton Collectibles has sales and use tax nexus.

1. [LO 2] Melanie operates Mel’s Bakery in Foxboro, Massachusetts with retail stores in Connecticut, Maine, Massachusetts, New Hampshire, and Rhode Island. Mel’s also ships specialty breads nationwide upon request. Determine Mel’s sales tax collection responsibility and calculate the sales tax liability for Massachusetts, Connecticut, Maine, New Hampshire, Rhode Island, and Texas using the following information:

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