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Exam 16: Multijurisdictional Taxation

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Question 61

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Which of the following is a principle used in applying the income-sourcing rules under U.S.tax law?

A) The rules should be acceptable to both countries.
B) The rules should favor the U.S.Treasury.
C) The rules should favor the treasury of the non-U.S.country.
D) The rules should apply to income items only; deductions need not be sourced in this way.

E) B) and C)
F) A) and C)

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Question 62

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describes) the degree of business activity that must be present before a taxing jurisdiction has the right to impose a tax on an out-of-state entity's income.

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Question 63

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All of the U.S.states have adopted a tax based on the net taxable income of corporations.

A service engineer spends 80% of her time maintaining the employer's productive business property, and 20% maintaining the employer's nonbusiness rental properties.This year, her compensation totaled $90,000.The payroll factor assigns $90,000 to the state in which the employer is based.

Hendricks Corporation, a domestic corporation, owns 40 percent of Shane Corporation and 55 percent of Ferrell Corporation, both foreign corporations.Ferrell owns the other 60 percent of Shane Corporation.Both Shane and Ferrell are CFCs.

Match each of the following items with the appropriate description, in applying the P.L.86-272 definition of solicitation. -Making a decision as to the creditworthiness of customers.

Which of the following determinations requires knowing the amount of one's foreign-source gross income?

General Corporation is taxable in a number of states.This year, General made a $100,000 sale from its A headquarters to a customer in B.This activity is not sufficient for General to create nexus with B.State B applies a throwback rule, but State A does not.In which states) will the sale be included in the sales factor numerator?

Parent and Junior form a unitary group of corporations.Parent is located in a state with an effective tax rate of 3%, while Junior's effective tax rate is 9%.Acting in concert to reduce overall tax liabilities, the group should:

Which of the following statements regarding income sourcing is correct?

Although apportionment formulas vary among jurisdictions, most states use the same three factors in the formula.The factors are ____________________, ____________________, and _.

Match each of the following terms with the appropriate description, in the state income tax formula.Apply the UDITPA rules in your responses. -Dividend income from P & G stock held.

In conducting multistate tax planning, the taxpayer should:

The following persons own Schlecht Corporation, a non-U.S.entity. None of the shareholders are related.Subpart F income for the tax year is $300,000.No distributions are made.Which of the following statements is correct?

ForCo, a subsidiary of a U.S.corporation incorporated in Belgium, manufactures widgets in Belgium and sells the widgets to its 100%-owned subsidiary in Germany.The income from the sale of widgets is not Subpart F foreign base company sales income.

Britta, Inc., a U.S.corporation, reports foreign-source income and pays foreign taxes as follows. Britta's worldwide taxable income is $1,600,000 and U.S.taxes before FTC are $336,000 assume a 21% tax rate).What is Britta's U.S.tax liability after the FTC?

ForCo, a foreign corporation not engaged in a U.S.trade or business, recognizes a $3 million gain from the sale of land located in the United States.The amount realized on the sale was $50 million.Absent any exceptions, what is the required withholding amount on the part of the purchaser of this land?

An) business operates in concert with its affiliated companies.As a result, the affiliates' data are included in the parent's apportionment computations.

Subpart F income includes portfolio income like dividends and interest.

Typically, sales/use taxes constitute about 20 percent of a state's annual tax collections.