CHAPTER24SOLUTIONS

CHAPTER24SOLUTIONS - CHAPTER 24 SOLUTIONS END OF CHAPTER...

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CHAPTER 24 SOLUTIONS END OF CHAPTER QUESTIONS COVERED IN LECTURE – NOT COLLECTED : 7, 8, 9, 10, 11, 14, 15, 16, 17, 25, 26, 27, AND 29. 7. A single-factor apportionment formula consisting solely of a sales factor tends to create greater levels of apportionable income for the state from nonresident (meaning also nonvoting) entities than an apportionment formula that double weights the sales factor. Most states now over-weight the sales factor for this reason. p. 24-14 and Example 9 8. In determining the numerator of the sales factor, most states follow UDITPA’s ‘‘ultimate destination concept,’’ whereunder sales of tangible personal property are assumed to take place at the point of delivery, as opposed to the location at which the shipment originates. Example 10 9. The solution depends upon whether Arizona applies a throwback rule in its sales factor. The throwback rule is an exception to the destination concept. It provides that, when a corporation is not subject to tax in the destination state or the purchaser is the U.S. govern- ment, the sales are treated as in-state sales of the origination state, and the actual destination of the product is disregarded. Consequently, when the seller is immune from tax in the destination state, the sales are considered to be in-state sales of the origination state if that state has a throwback provision. The throwback rule was established as an attempt to ensure that none of a corporation’s sales escaped taxation. (Arizona has adopted such a throwback rule.) Example 11 10. The unitary theory can increase the taxpayer’s income taxes as the apportionment formula
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CHAPTER24SOLUTIONS - CHAPTER 24 SOLUTIONS END OF CHAPTER...

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