Ch25TB - 911 Chapter 25 Multijurisdictional Taxation:...

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© 2009 CCH. All Rights Reserved. Chapter 25 911 Chapter 25 Multijurisdictional Taxation: International and State and Local Transactions TRUE-FALSE QUESTIONS—CHAPTER 25 A franchise tax is a tax levied on the pro f ts of a franchisor. 1. Most states levy no income tax on corporations. 2. All states require their residents to pay income tax. 3. Most states utilize the UDITPA formula for apportioning income. 4. The Commerce Clause of the U.S. Constitution addresses nexus issues. 5. U.S. citizens who have paid foreign taxes on their income, all of which was earned abroad, are not responsible for 6. f ling a U.S. tax return since all of their tax liability was satis f ed with foreign taxes. Income tax treaties have precedence over the Internal Revenue Code. 7. The sourcing rules for foreign income are used to determine the foreign tax credit. 8. All foreign residents earning U.S.-source income are subject to withholding. 9. Subpart F income is taxed to each of the shareholders of a controlled foreign corporation. 10. The unemployment insurance tax is a tax paid by an employer on an employee’s wages. 11. The estate tax is a tax imposed on an individual’s right to transfer property at death. 12. If an individual lives in one state but works in another and the two states have entered into a reciprocal personal 13. income tax agreement, the individual’s earnings will be taxed by the state of nonresidency and not by the home state. The nexus requirements of the Due Process and Commerce clauses are identical. 14. Most state courts have held that economic presence can establish substantial nexus with a state. 15. The U.S. Supreme Court has held that the Commerce Clause does not bar a state from taxing a nondomiciliary 16. corporation engaged exclusively in interstate commerce. A variety of formulas are used by states to apportion nonbusiness business income. 17. The gift tax is paid by the donee, not the donor. 18. All states recognize S corporation status. 19. Most states do not tax partnerships as separate entities. 20.
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912 CCH Federal Taxation—Comprehensive Topics Chapter 25 © 2009 CCH. All Rights Reserved. MULTIPLE CHOICE QUESTIONS—CHAPTER 25 The sales tax is most similar to what other state tax? 21. Gross receipts tax a. Transfer tax b. Use tax c. Income tax d. A taxpayer’s contact with a state determines the tax implications for that taxpayer. The term this describes is: 22. Interstate commerce a. Nexus b. Due process c. Solicitation requirements d. Most states use what starting point for their corporate income tax determination? 23. A separate set of state income tax laws a. Federal gross income b. Federal gross income with certain adjustments c. Federal taxable income
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This note was uploaded on 10/17/2010 for the course ACTG 310 taught by Professor Neal during the Spring '10 term at N.E. Illinois.

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Ch25TB - 911 Chapter 25 Multijurisdictional Taxation:...

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