Taxation in the United States and U.s.

ch13
Student: ___________________________________________________________________________

1.

In the United States, corporations are subject only to taxes imposed by the federal government.
True False

2.

The federal income tax deduction allowed for state income taxes paid decreases the cost of the state taxes. True False

3.

If a corporation with a 35% marginal federal income tax rate pays $20,000 state income tax, the after-tax cost of the state tax is $13,000.
True False

4.

A corporation is usually subject to tax by any state in which it engages in any business transactions.
True False

5.

Article 1 of the U.S. Constitution, referred to as the commerce clause, prohibits state governments from using a tax to discriminate against interstate commerce.
True False

6.

Article 1 of the U.S. Constitution, referred to as the commerce clause, prohibits a state from charging an extra 10 cent tax per gallon on gasoline sold to trucks with out-of-state license plates.
True False

7.

According to Public Law 86-272, the sale of tangible goods to residents of a state is not sufficient to establish nexus in that state.
True False

8.

If Gamma Inc. is incorporated in Ohio and has its commercial domicile in Cleveland, the state of Ohio has jurisdiction to tax 100% of Gamma's business income.
True False

9.

Non-resident firms selling tangible goods to in-state residents can use P.L. 86-272 to avoid having income tax nexus in a state.
True False

10. The UDITPA formula for state income tax apportionment consists of three factors: sales, payroll, and profit. True False
11. The UDITPA formula for apportioning income among states is based on four equally weighted factors. True False
12. The sales factor in the UDITPA state income tax apportionment formula equals in-state sales divided by total sales.
True False
13. The sales factor in the UDITPA state income tax apportionment formula equals out-of-state sales