Question 1. Nonbusiness income receives tax-exempt treatment under all state corporate income taxes.

1. Nonbusiness income receives tax-exempt treatment under all state corporate income taxes.

a. True

b. False

2. Double weighting the sales factor effectively decreases the corporate income tax burden on taxpayers based in the state, such as entities with in-state headquarters.

a. True

b. False

.

3. An assembly worker earns a $50,000 salary and receives a fringe benefit package worth $15,000. The payroll factor assigns $65,000 for this employee.

a. True

b. False

4. A service engineer spends 80% of her time maintaining the employer’s productive business property and 20% maintaining the employer’s nonbusiness rental properties. This year, her compensation totaled $90,000. The payroll factor assigns $90,000 to the state in which the employer is based.

a. True

b. False

5. The property factor includes land and buildings used for business purposes.

a. True

b. False

6. The property factor includes business assets that the taxpayer owns, but also those merely used under a lease agreement.

a. True

b. False

.

7. A unitary business applies a combined apportionment formula, including data from operations of all of the affiliates.

a. True

b. False

8. By making a water’s edge election, the multinational taxpayer can limit the reach of unitary principles to the

apportionment factors and income of its U.S. and E.U. affiliates.

a. True

b. False

9. A unitary group of entities files a combined return that includes all of the affiliates’ income and apportionment data.

a. True

b. False

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

a. True

b. False

.

11.S corporations flow-through income amounts to its shareholders, and most states require a withholding of shareholder taxes on the allocated amounts.

a. True

b. False

12.An LLC apportions and allocates its annual taxable income in the same manner used by any other business operating in the state.

a. True

b. False

13.Almost all of the states assess some form of consumer-level sales/use tax.

a. True

b. False

14.The use tax is designed to complement the sales tax. A use tax typically covers purchases made out of state and brought into the jurisdiction.

a. True

b. False

15.Most states’ consumer sales taxes are paid by the final purchaser of the taxable asset.

a. True

b. False

16.Typically included in the sales/use tax base is the purchase of tablet computers and cell phone equipment by a large manufacturing firm, whose sales force uses the items.

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