Solved by verified expert :1831. CHAPTER
16—MULTISTATE CORPORATE TAXATION Question MC #1
Norman Corporation owns and operates two manufacturing facilities, one in State
X and the other in State Y. Due to a temporary decline in the corporation’s
sales, Norman has rented 20% of its Y facility to an unaffiliated corporation.
Norman generated $1,000,000 net rental income and $2,000,000 income from
manufacturing.
Norman is incorporated in Y. For X and Y purposes, rental income is classified
as allocable nonbusiness income. By applying the statutes of each state, Norman
determined that its apportionment factors are .65 for X and .35 for Y.
Norman’s income attributed to X is:
a.
$0.
b. $1,000,000.
c. $1,300,000.
d. $2,000,000.
e. $3,000,000.
1832. CHAPTER
16—MULTISTATE CORPORATE TAXATION Question MC #2
Wailes Corporation is subject to a corporate income tax only in State X. The
starting point in computing X taxable income is Federal taxable income. Wailes’
Federal taxable income is $750,000, which includes a $75,000 deduction for
state income taxes. During the year, Wailes received $20,000 interest on
Federal obligations. X tax law does not allow a deduction for state income tax
payments.
Wailes’ taxable income for X purposes is:
a.
$825,000.
b. $805,000.
c. $750,000.
d. $680,000.
1833. CHAPTER
16—MULTISTATE CORPORATE TAXATION Question MC #3
Perez Corporation is subject to tax only in State A. Perez generated the
following income and deductions.
Federal taxable income
$500,000
State A income tax expense
50,000
Depreciation allowed for Federal tax purposes
300,000
Depreciation allowed for state tax purposes
400,000
Federal taxable income is the starting point in computing A taxable income.
State income taxes are not deductible for A tax purposes. Perez’s A taxable
income is:
a.
$400,000.
*b. $450,000.
c. $600,000.
d. $650,000.
1834. CHAPTER
16—MULTISTATE CORPORATE TAXATION Question MC #4
In determining a corporation’s taxable income for state income tax purposes,
which of the following does not
constitute a subtraction from Federal income?
a.
Interest on U.S. obligations.
b. Expenses that are directly or
indirectly related to state and municipal interest that is taxable for state
purposes.
c. The amount by which the Federal
deduction for depreciation exceeds the depreciation deduction permitted for
state tax purposes.
d. The amount by which the state loss
from the disposal of assets exceeds the Federal loss from such disposal.
1835. CHAPTER
16—MULTISTATE CORPORATE TAXATION Question MC #5
In determining state taxable income, all of the following are adjustments to
Federal income except:
a.
A Federal net operating loss.
b. Federal income tax expense.
c. Dividends received from other U.S.
corporations.
d. Wages paid to officers and
executives.
1836. CHAPTER
16—MULTISTATE CORPORATE TAXATION Question MC #6
Bulky Company sold an asset on the first day of the tax year for $500,000.
Bulky’s Federal tax basis for the asset was $300,000. Because of differences in
cost recovery schedules, the state regular-tax basis in the asset was $375,000.
What adjustment, if any, should be made to Bulky’s Federal taxable income in
determining the correct taxable income for the typical state?
a.
$75,000.
b. $25,000.
c. ($75,000).
d. $0.
1837. CHAPTER
16—MULTISTATE CORPORATE TAXATION Question MC #7
Federal taxable income is used as the starting point in computing the state’s
income tax base, but numerous state adjustments or modifications generally are
required to:
a.
Reflect differences between state and Federal tax statutes.
b. Remove income that a state is
constitutionally prohibited from taxing.
c. Allow for all of the states to use
the same definition of taxable income.
d. a. and b.
1838. CHAPTER
16—MULTISTATE CORPORATE TAXATION Question MC #8
The model law relating to the assignment of income among the states for
corporations is:
a.
The Multistate Tax Treaty.
b. The Uniform Division of Income for
Tax Purposes Act (UDITPA).
c. Public Law 86-272.
d. The Multistate Tax Commission (MTC).
1839. CHAPTER
16—MULTISTATE CORPORATE TAXATION Question MC #9
Under P.L. 86-272, which of the following transactions by itself would create
nexus with a state?
a.
Order solicitation for a computer, approved and filled from another state.
b. Order solicitation for a marketable
security, approved, and filled from another state.
c. Order solicitation for a machine,
with credit approval from another state.
d. The conduct of a training seminar for
customers as to how to install and operate a new software product.
1840. CHAPTER
16—MULTISTATE CORPORATE TAXATION Question MC #10
Under P.L. 86-272, which of the following transactions by itself would create
nexus with a state?
a.
Inspection by a sales employee of the customer’s inventory for specific product
lines.
b. Using an independent contractor who
acts as a manufacturer’s representative for the taxpayer through a sales office
in the state.
c. Executing a sales campaign, using an
advertising agency acting as an independent contractor for the taxpayer.
d. Maintenance of inventory in the state
by an independent contractor under a consignment plan.
