Test your state Tax I.Q.

• Author: Martin, Kim S.

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 taxes paid by corporations.

1. True or False?--For sales tax 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?

   1. Colgate-Palmolive

   2. Wrigley

   3. Alcan Aluminum

   4. Barclays Bank

3. The initials F.T.A., a national organization of state and local tax officials, stand for:

   1. Foundation of Tax Administration

   2. Frontal Taxpayer Attack

   3. Federation of Tax Administrators

   4. Fair Tax Assessors

4. The "transactional" and "functional" tests are generally applied in determining:

   1. nexus

   2. business/non-business income

   3. the existence of a unitary relationship

   4. 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 for valuation purposes.

6. Which of the following Michigan Single Business Tax cases addresses taxation of employer contributions to ERISA plans?

   1. Gillette

   2. Thiokol Corp.

   3. Caterpillar

   4. 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) apportionment formula is used by which of the following states.

   1. Iowa

   2. Arizona

   3. Texas

   4. 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?

   1. 180

   2. 90

   3. 60

   4. 30

10. True or False?--There is only one state that currently does not allow a net operating loss deduction.

11. Many states impose income, franchise, and sales taxes. Which of the following states does not?

    1. Indiana

    2. Tennessee

    3. Missouri

    4. Pennsylvania

12. Which of the following states impose(s) a tax on net income at a rate greater than 8%?

    1. California

    2. New York

    3. Massachusetts

    4. All of the above

13. For property tax purposes, the three basic methods of valuation of property are which of the following:

    1. cost, net book value, and sales comparison

    2. cost, income, and sales comparison

    3. income, net book...