2011_multistate_probs - PROBLEM MATERIALS DISCUSSION...

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PROBLEM MATERIALS DISCUSSION QUESTIONS 1. What states do not impose a sales tax? 2. What is a use tax? Who is responsible for collecting and remitting use taxes to the applicable tax authority? 3. Tiger Corporation, a manufacturer based in State P, purchases office furniture from a retailer located in P. Tiger uses the furniture in its administrative offices located in P. a. What are the sales and use tax consequences of this purchase? b. Now assume that instead of buying the office furniture from a local retailer, Tiger purchases the furniture from a mail-order vendor located in another state. How does this change the sales and use tax consequences of the purchase? 4. All states impose property taxes. What types of business assets are typically subject to property tax? 5. What methods does a property tax assessor typically use to estimate the market value of taxable property? 6. Which states do not levy an individual income tax? Which states do not levy a corporate income tax? 7. An important state tax concept is “nexus.” What does “nexus” mean? 8. The physical presence test for nexus is based on what legal authority? 9. An out-of-state company must meet numerous requirements to qualify for protection under Public Law 86-272. List these requirements. 10. Larger business enterprises often have legal structures that include a parent corporation with one or more chains of subsidiary corporations. Explain the corporate group filing options for financial reporting, federal income tax and state income tax purposes. Assume the states in which the company has nexus all require combined unitary reporting. 11. How would your answer to Question 10 change if the states in which the company has nexus all require separate company reporting? 12. Virtually all of the states that tax corporate income piggyback on the federal system by adopting federal taxable income as the starting place for computing state taxable income. Some states conform to a static federal tax base, while other states conform to a moving federal tax base. Explain this distinction.
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13. Despite the broad conformity to the federal tax base, each state requires a corporation to make numerous addition and subtraction modifications to arrive at state taxable income. Identify the common adjustments to the federal tax base in computing a corporation’s state taxable income. 14. Most states use apportionment formulae that place more weight on the sales factor than on the property or payroll factors. Why are state lawmakers attracted to apportionment formulae that emphasize the sales factor? 15. Explain the rules for assigning sales of inventory as well as business receipts other than inventory sales to the numerator of each nexus state’s sales factor. 16. How is payroll defined for purposes of computing a state’s payroll factor?
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2011_multistate_probs - PROBLEM MATERIALS DISCUSSION...

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