Test your state Tax I.Q.This is your opportunity to prove how much (how little?) you know about the state and local taxes corporations must pay. Answer the 15 questions below, then turn the page for the correct answers, along with a grading scale. Note: All references to taxes pertain to pertain to verb relate to, concern, refer to, regard, be part of, belong to, apply to, bear on, befit, be relevant to, be appropriate to, appertain to taxes paid by corporations. 1. True or False?--For sales tax sales tax, levy on the sale of goods or services, generally calculated as a percentage of the selling price, and sometimes called a purchase tax. It is usually collected in the form of an extra charge by the retailer, who remits the tax to the government. purposes, the terms "exclusion" and "exemption" are interchangeable. Also, the terms "bulk sale" and "sale for resale" have the same meaning. 2. Which of the following state income tax cases does not deal with worldwide combination? a. Colgate-Palmolive b. Wrigley c. Alcan Aluminum d. Barclays Bank 3. The initials F.T.A., a national organization of state and local tax officials, stand for: a. Foundation of Tax Administration b. Frontal Taxpayer Attack c. Federation of Tax Administrators d. Fair Tax Assessors 4. The "transactional" and "functional" tests are generally applied in determining: a. nexus b. business/non-business income c. the existence of a unitary relationship d. foreign dividends received deduction 5. True or False?--A majority of the jurisdictions that levy a property tax on business inventories allow the use of LIFO (Last In-First Out) A queueing method in which the next item to be retrieved is the item most recently placed in the queue. Contrast with FIFO. LIFO - stack for valuation purposes. 6. Which of the following Michigan Single Business Tax cases addresses taxation of employer contributions to ERISA See Employee Retirement Income Security Act. ERISA See Employee Retirement Income Security Act (ERISA). plans? a. Gillette b. Thiokol Corp. c. Caterpillar d. Guardian Industries 7. True or False?--For "drop shipments," most states do not require the supplier of the property to obtain a resale certificate from the reseller of the property. 8. For purposes of computing tax based on income, a single sales (gross receipts the total of the receipts, before they are diminished by any deduction, as for expenses; - distinguished from net profits. - Bouvier. See under Gross, a. os> See also: Gross Receipt ) apportionment The process by which legislative seats are distributed among units entitled to representation; determination of the number of representatives that a state, county, or other subdivision may send to a legislative body. The U.S. formula is used by which of the following states. a. Iowa b. Arizona c. Texas d. Both a and c 9. How many days do taxpayers typically have to file an initial protest of a state income, franchise, or sales/use tax assessment? a. 180 b. 90 c. 60 d. 30 10. True or False?--There is only one state that currently does not allow a net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. deduction. 11. Many states impose income, franchise, and sales taxes. Which of the following states does not? a. Indiana b. Tennessee c. Missouri d. Pennsylvania 12. Which of the following states impose(s) a tax on net income at a rate greater than 8%? a. California b. New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of c. Massachusetts d. All of the above 13. For property tax purposes, the three basic methods of valuation of property are which of the following: a. cost, net book value, and sales comparison b. cost, income, and sales comparison c. income, net book value, and fair market value d. hire an appraiser A person selected or appointed by a competent authority or an interested party to evaluate the financial worth of property. Appraisers are frequently appointed in probate and condemnation proceedings and are also used by banks and real estate concerns to determine the market , hire an attorney, and hire a consultant 14. True or False?--Public Law No. 86-272 applies to gross receipts taxes as well as income taxes. 15. The Finnigan case: a. was decided by the U.S. Supreme Court b. was decided by the California Kangaroo Court kangaroo court moblike tribunal, usually disregarding principles of justice. [Pop. Culture: Misc.] See : Injustice c. pertains to California's throwback throwback see atavism. sales issue d. applies only to California taxpayers who have made the water's-edge election ANSWERS 1. False 2. b -- Wrigley addresses income tax nexus 3. C 4. b 5. False -- none allow LIFO 6. b 7. False -- more than 35 states do require a certificate 8. d 9. d 10. True -- Pennsylvania 11. a -- Indiana has no franchise tax 12. d 13. b 14. False -- applies only to income taxes 15. c If you answered 12 or more questions correctly, congratulations! You are a state tax expert. If you answered correctly on 8 to 11 questions, you know more about state taxes than the average citizen -- but there is room for improvement. We recommend that you have lunch with your company's state/local tax manager(s) at least twice per month. (If you are a state/ local tax manager, heed the recommendation in the following paragraph.) If you answered correctly on 7 or fewer questions, you should seriously consider attending the annual TEI 1. (communications) TEI - Terminal Endpoint Identifier. 2. (text, project) TEI - Text Encoding Initiative. State and Local/Property Tax Course, to be held in 1994 on the dates July 10-15. (Editor's Note: Information about the course will be sent to all TEI members in May.) |
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