Principles of Taxation for Business and Investment Planning 2020 Edition
23rd Edition
ISBN: 9781260433210
Author: Jones, Sally
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 8AP
a.
To determine
Compute the use tax that Company H owes to State H for the property purchased in State K.
b.
To determine
Compute the use tax that Company H owes to State H for the property purchased in State L.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Heliot Company operates its business in State H, which levies a 6 percent sales and use tax. This year, Heliot purchased a
$785,000 item of tangible property in State K and paid $23,550 sales tax to the state. It also purchased a $857,000 item of
tangible property in State L and paid $53,991 sales tax to the state. Firm H transported both items of property into State H
for use in its business.
Required:
Compute the use tax that Heliot owes to State H for the property purchased in State K.
Compute the use tax that Heliot owes to State H for the property purchased in State L.
Compute the use tax that Heliot owes to State H for the property purchased in State K.
Pre credit use tax
Sales tax paid to State K
Use tax owed to State H
Amount
Compute the use tax that Heliot owes to State H for the property purchased in State L.
Pre credit use tax
Sales tax paid to State L
Use tax owed to State H
Amount
Cromwell Corporation does business in two states, A and B. State A uses an equal-weighted, three-factor apportionment formula and
has a 5 percent state tax rate. State B uses an apportionment formula that double-weights the sales factor and has a 6 percent state
tax rate. Cromwell's state-level taxable income, before apportionment, is $2 million. It has identified the following components of its
sales, payroll, and property factors:
Sales
Payroll
Average property
State A
$ 6,000,000
2,000,000
1,000,000
Required A Required B
Required:
a. Calculate Cromwell's apportionment factors, income apportioned to each state, and state tax liability.
b. State B is considering changing its apportionment formula to place 100 percent of the weight on the sales factor, ignoring payroll
and property for apportionment purposes. Given its current levels of activity, what would Cromwell's state tax liability be for each
state?
Complete this question by entering your answers in the tabs below.
Apportionment…
Oldham Incorporated conducts business in State M and State N, which both use the UDITPA three-factor formula to apportion income. State M's corporate tax rate is 4.5 percent, and State N's corporate tax rate is 7 percent. This year, Oldham had the following sales, payroll, and property (in thousands of dollars) in each state:
Gross receipts from sales
Payroll expense
Property costs
State M
$ 3,000
800
900
State N
$ 7,500
1,200
1,000
Total
$ 10,500
2,000
1,900
Required:
If Oldham's before-tax income was $3 million, compute its State M and State N tax. (Round all apportionment factors to 4 decimal
places, e.g., 47.15% would be 0.4715. Enter "Apportionment percentage" and "Tax rate" in decimals and not in percentage. Do not round any intermediate values. Enter your answers in dollars and not in millions or thousands of dollars.)
Chapter 1 Solutions
Principles of Taxation for Business and Investment Planning 2020 Edition
Ch. 1 - Prob. 1QPDCh. 1 - Prob. 2QPDCh. 1 - Prob. 3QPDCh. 1 - Prob. 4QPDCh. 1 - Prob. 5QPDCh. 1 - A local government imposed a new 2 percent tax on...Ch. 1 - Prob. 7QPDCh. 1 - Prob. 8QPDCh. 1 - Prob. 9QPDCh. 1 - Prob. 10QPD
Ch. 1 - Prob. 11QPDCh. 1 - Prob. 12QPDCh. 1 - Prob. 13QPDCh. 1 - Prob. 14QPDCh. 1 - One way for the federal government to increase tax...Ch. 1 - The Internal Revenue Code and Treasury regulations...Ch. 1 - Mr. Josh Kenney, a U.S. citizen and resident of...Ch. 1 - Prob. 2APCh. 1 - Prob. 3APCh. 1 - This year, State A raised revenues by increasing...Ch. 1 - Prob. 5APCh. 1 - Prob. 6APCh. 1 - Prob. 7APCh. 1 - Prob. 8APCh. 1 - Prob. 9APCh. 1 - Mrs. Doyle, a resident of Rhode Island, traveled...Ch. 1 - Prob. 11APCh. 1 - Prob. 12APCh. 1 - Mr. and Mrs. Underhill operate a hardware store in...Ch. 1 - Prob. 14APCh. 1 - Wallis Company produces circuit boards in a...Ch. 1 - Prob. 1IRPCh. 1 - Prob. 2IRPCh. 1 - Bailey Company, which has offices in six states,...Ch. 1 - Prob. 4IRPCh. 1 - Yarrow Company orders 500,000 of office furniture...Ch. 1 - Acme Corporation was formed under the laws of...Ch. 1 - Prob. 7IRPCh. 1 - Prob. 8IRPCh. 1 - Prob. 9IRPCh. 1 - Mr. Imhoff, age 72, has lived in Los Angeles his...Ch. 1 - Prob. 1TPCCh. 1 - KTR Company earns a 10 profit on each unit of...
Knowledge Booster
Similar questions
- Fillon operates manufacturing facilities in States A and B. Fillon has nexus with both states; apportionment factors are 0.65 for A and 0.35 for B. Taxable income for the year totaled $425,625 , with a $567,500 A profit and a $141,875 B loss. If required, round your final answers to the nearest dollar. Calculate taxable income for the year for: State A: State B: %24 %24arrow_forwardOldham Incorporated conducts business in State M and State N, which both use the UDITPA three-factor formula to apportion income State M's corporate tax rate is 4.5 percent, and State N's corporate tax rate is 7 percent. This year, Oldham had the following sales, payroll, and property (in thousands of dollars) in each state: Gross receipts from sales Payroll expense Property costs State M 3,000 800 900 State N $ 7,500 1,200 1,000 Total $ 10,500 2,000 1,900 Required: Oldham's before-tax income was $3 million. Compute Oldham's State M and State N tax if State N uses an apportionment formula in which the sales factor is double-weighted. (Round all apportionment factors to 4 decimal places, e.g., 47.15% would be 0.4715. Enter "Apportionment percentage" and "Tax rate" in decimals and not in percentage. Do not round any intermediate values. Enter your answers in dollars and not in millions or thousands of dollars.)arrow_forwardCromwell Corporation does business in two states, A and B. State A uses an equal-weighted, three-factor apportionment formula and has a 5 percent state tax rate. State B uses an apportionment formula that double-weights the sales factor and has a 6 percent state tax rate. Cromwell's state-level taxable income, before apportionment, is $3.5 million. It has identified the following components of its sales, payroll, and property factors: Sales Payroll Average property Required A Required B State A $ 7,500,000 3,500,000 2,500,000 Required: a. Calculate Cromwell's apportionment factors, income apportioned to each state, and state tax liability. b. State B is considering changing its apportionment formula to place 100 percent of the weight on the sales factor, ignoring payroll and property for apportionment purposes. Given its current levels of activity, what would Cromwell's state tax liability be for each state? Complete this question by entering your answers in the tabs below.…arrow_forward
- Cromwell Corporation does business in two states, A and B. State A uses an equal-weighted, three-factor apportionment formula and has a 5 percent state tax rate. State B uses an apportionment formula that double-weights the sales factor and has a 6 percent state tax rate. Cromwell's state-level taxable income, before apportionment, is $3.5 million. It has identified the following components of its sales, payroll, and property factors: Sales Payroll Average property Required: State A $ 7,500,000 3,500,000 2,500,000 State B $ 4,750,000 2,700,000 1,550,000 Total $ 12,250,000 6,200,000 4,050,000 a. Calculate Cromwell's apportionment factors, income apportioned to each state, and state tax liability. b. State B is considering changing its apportionment formula to place 100 percent of the weight on the sales factor, ignoring payroll and property for apportionment purposes. Given its current levels of activity, what would Cromwell's state tax liability be for each state? Answer is not…arrow_forwardHerger Corporation does business in California, Nevada, and Oregon, and has nexus in these states as well. Herger’s California state tax base was $943,500 after making the required federal/state adjustments. Herger’s federal tax return contains the following items: Item $ Federal T-note interest income 5,900 Nevada municipal bond interest income 3,690 California municipal bond interest income 5,500 Interest expense related to T-note interest income 1,540 Royalty income 181,000 Travel expenses 10,100 Determine Herger’s California business income.arrow_forwardHerger Corporation does business in California, Nevada, and Oregon and has income tax nexus in these states as well. Herger's California state tax base was $939,500 after making the required federal/state adjustments. Herger's federal tax return contains the following items: Item Amount Federal T-note interest income $ 4,700 Nevada municipal bond interest income $ 4,040 California municipal bond interest income $ 6,400 Interest expense related to T-note interest income $ 1,710 Royalty income $ 112,000 Travel expenses $ 9,300 Determine Herger's business income.arrow_forward
- A VAT registered person engages in both VAT and VAT exempt business. During the year total sales amounted to P500,000, exclusive of the VAT. Sale of the VAT exempt business amounts toP200,000. During the quarter, the business incurred the following: Input VAT arising from repairs amounting P6,000. On the other hand, input on supplies, for common use amounted P1,200. The creditable input tax isarrow_forwardMr. and Mrs. Ruiz operate a hardware store in a jurisdiction that levies both a sales tax on retail sales of tangible personality and an annual personal property tax on business tangibles. The personal property tax is based on book value as of December 31. This year Mr. and Mrs. Ruiz purchased $840,000 of inventory for their store Required: a. Are Mr. and Mrs. Ruiz required to pay sales tax on the purchase of the inventory? Yes O No b. How can Mr. and Mrs. Ruiz minimize their personal property tax by controlling the timing of their inventory purchases? O Minimize inventory on hand as of December 31 O Minimize inventory on hand as of March 31 O Minimize inventory on hand as of December 1 O Minimize inventory on hand as of April 30arrow_forwardVolunteer Corporation reported taxable income of $450,000 from operations this year. The company paid federal income taxes of $94,500 on this taxable income. During the year, the company made a distribution of land to its sole shareholder, Rocky Topp. The land's fair market value was $81,000 and its tax and E&P basis to Volunteer was $65,500. Rocky assumed a mortgage attached to the land of $16,200. The company had accumulated E&P of $864,000 at the beginning of the year. d. What amount of dividend income does Rocky report as a result of the distribution? Dividend incomearrow_forward
- Volunteer Corporation reported taxable income of $450,000 from operations this year. The company paid federal income taxes of $94,500 on this taxable income. During the year, the company made a distribution of land to its sole shareholder, Rocky Topp. The land's fair market value was $81,000 and its tax and E&P basis to Volunteer was $65,500. Rocky assumed a mortgage attached to the land of $16,200. The company had accumulated E&P of $864,000 at the beginning of the year. e. What is Rocky's income tax basis in the land received from Volunteer? Income tax basisarrow_forwardVolunteer Corporation reported taxable income of $450,000 from operations this year. The company paid federal income taxes of $94,500 on this taxable income. During the year, the company made a distribution of land to its sole shareholder, Rocky Topp. The land's fair market value was $81,000 and its tax and E&P basis to Volunteer was $65,500. Rocky assumed a mortgage attached to the land of $16,200. The company had accumulated E&P of $864,000 at the beginning of the year. a. Compute Volunteer's taxable income and federal income tax. Taxable income $ 465,500 Federal income taxarrow_forwardVolunteer Corporation reported taxable income of $450,000 from operations this year. The company paid federal income taxes of $94,500 on this taxable income. During the year, the company made a distribution of land to its sole shareholder, Rocky Topp. The land's fair market value was $81,000 and its tax and E&P basis to Volunteer was $65,500. Rocky assumed a mortgage attached to the land of $16,200. The company had accumulated E&P of $864,000 at the beginning of the year. c. Compute Volunteer's accumulated E&P at the beginning of next year. Accumulated E&P at the beginning of next yeararrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
