Roughly forty percent of all taxes paid

1783. Question TF #1
Roughly forty percent of all taxes paid by businesses in the U.S. are to state, local, and municipal jurisdictions.

a. True
b. False

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1784. Question TF #2
Usually a business chooses a location where it will build a new plant based chiefly on tax considerations.

a. True
b. False

1785. Question TF #3
Politicians use tax devices to create economic development incentives.

a. True
b. False

1786. Question TF #4
All of the U.S. states have adopted a tax based on net taxable income.

a. True
b. False

1787. Question TF #5
Most of the U.S. states have adopted an alternative minimum tax, similar to the Federal system.

a. True
b. False

1788. Question TF #6
States collect the most tax dollars from the corporate income tax.

a. True
b. False

1789. Question TF #7
The corporate income tax provides about 5 percent of the annual tax revenues for the typical U.S. state.

a. True
b. False

1790. Question TF #8
State and local politicians tend to apply new and increased taxes to taxpayers who are visitors to the jurisdiction and cannot vote to reelect the lawmaker.

a. True
b. False

1791. Question TF #9
A state or local tax on a corporation’s income might be called a franchise tax or a business privilege tax.

a. True
b. False

1792. Question TF #10
Most states begin the computation of taxable income with an amount from the Federal income tax return.

a. True
b. False

1793. Question TF #11
If a state follows Federal income tax rules, the state’s tax compliance and enforcement become easier to accomplish.

a. True
b. False

1794. Question TF #12
A typical state taxable income addition modification is the interest income from U.S. Treasury bonds.

a. True
b. False

1795. Question TF #13
A typical state taxable income addition modification is the Federal net operating loss (NOL) deduction.

a. True
b. False

1796. Question TF #14
A state cannot levy a tax on a business unless the business was incorporated in the state.

a. True
b. False

1797. Question TF #15
Typical indicators of nexus include the presence of employees based in the state, and the ownership or lease of realty there.

a. True
b. False

1798. Question TF #16
Under P.L. 86-272, the taxpayer is exempt from state taxes on income resulting from the mere solicitation of orders for the sale of in-state realty.

a. True
b. False

1799. Question TF #17
In most states, a taxpayer’s income is apportioned on the basis of a formula measuring the extent of business contact, and allocated according to the location of property owned or used.

a. True
b. False

1800. Question TF #18
All of the U.S. states use the same apportionment formula and factors.

a. True
b. False

1801. Question TF #19
Nonbusiness income includes dividends received from investment securities.

a. True
b. False

1802. Question TF #20
Double weighting the sales factor effectively increases the tax burden on taxpayers based in the state, such as corporations with in-state headquarters.

a. True
b. False

1803. Question TF #21
An assembly worker earns a $30,000 salary and receives a fringe benefit package worth $15,000. The payroll factor assigns $30,000 for this employee.

a. True
b. False

1804. Question TF #22
A service engineer spends 60% of her time maintaining the employer’s productive business property and 40% maintaining the employer’s nonbusiness rental properties. This year, her compensation totaled $90,000. The payroll factor assigns $54,000 to the state in which the employer is based.

a. True
b. False

1805. Question TF #23
The property factor includes land and buildings used for business purposes.

a. True
b. False

1806. Question TF #24
The property factor includes business assets that the taxpayer owns, but also those merely used under a lease agreement.

a. True
b. False

1807. Question TF #25
A unitary business is treated as a single entity for state tax purposes, with a combined apportionment formula including data from all of the operations of the business.

a. True
b. False

1808. Question TF #26
By making a water’s edge election, the multinational taxpayer can limit the reach of the unitary theory to U.S.-based factors and income.

a. True
b. False

1809. Question TF #27
A few states recognize an entity’s S corporation status, such that taxable income flows through directly to shareholders, but they also assess a state-level tax on the entity.

a. True
b. False

1810. Question TF #28
In most states, Federal S corporations must make a separate state-level election of the flow-through status.

a. True
b. False

1811. Question TF #29
S corporations must withhold taxes on the portions of the entity’s income allocated to its out-of-state shareholders.

a. True
b. False

1812. Question TF #30
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

1813. Question TF #31
Almost all of the states assess some form of consumer-level sales/use tax.

a. True
b. False

1814. Question TF #32
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

1815. Question TF #33
A taxpayer has nexus with a state for sales and use tax purposes if it has a physical presence in the state.

a. True
b. False

1816. Question TF #34
Most states’ consumer sales taxes apply directly to the final purchaser of the taxable asset, but the seller remits the tax to the state treasury.

a. True
b. False

1817. Question TF #35
Typically included in the sales/use tax base is the purchase of computer and cell phone equipment by a large consulting firm that is incorporated in the state.

a. True
b. False

1818. Question TF #36
Typically exempt from the sales/use tax base is the purchase of prescription medicines by an individual.

a. True
b. False

1819. Question TF #37
Typically exempt from the sales/use tax base is the purchase of lumber by a do-it-yourself homeowner, when she builds a deck onto her patio.

a. True
b. False

1820. Question TF #38
Typically exempt from the sales/use tax base is the purchase by a symphony orchestra of printed music for its players.

a. True
b. False

1821. Question TF #39
Most states waive the collection of sales tax on groceries.

a. True
b. False

1822. Question TF #40
Typically exempt from the sales/use tax base is the purchase of tools by a manufacturer to make the widgets that it sells.

a. True
b. False

1823. Question TF #41
Typically exempt from the sales/use tax base is the purchase of clothing from a neighbor’s “garage sale.”

a. True
b. False

1824. Question TF #42
Use tax would be due if an individual purchased an auto in State A and used it at his home in State B.

a. True
b. False

1825. Question TF #43
The typical state sales/use tax falls on sales of both real and personal property.

a. True
b. False

1826. Question TF #44
Sales/use tax nexus is established for the taxpayer by the sales-solicitation activities of an independent contractor acting on the taxpayer’s behalf.

a. True
b. False

1827. Question TF #45
In most states, medical services are exempt from the sales/use tax base.

a. True
b. False

1828. Question TF #46
The typical local property tax falls on both an investor’s real estate and her stock portfolio.

a. True
b. False

1829. Question TF #47
A capital stock tax usually is structured as an excise tax imposed on a corporation’s “net worth,” using financial statement data to compute the tax.

a. True
b. False

1830. Question TF #48
A city might assess a recording tax when a business takes out a mortgage on its real estate.

a. True
b. False