Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Happy Hippos ( HH ) is a manufacturer and retailer of New England crafts headquartered in Camden, Maine. HH provides services and has sales, employees,

Happy Hippos (HH) is a manufacturer and retailer of New England crafts headquartered in Camden, Maine. HH provides services and has sales, employees, property, and commercial domicile as follows:
Happy Hippos In-State Activities
State Sales Employees Property Services Commercial Domicile
Connecticut
Maine
Massachusetts
New York
Rhode Island
Vermont
HH's sales of goods and services by state are as follows:
Happy Hippos Sales
State Goods Services Total
Connecticut $ 78,231 $ 52,321 $ 130,552
Maine 292,81381,313374,126
Massachusetts 90,23890,238
New York 129,322129,322
Rhode Island 98,31398,313
Vermont 123,91423,942147,856
Totals $ 812,831 $ 157,576 $ 970,407
HH has federal taxable income of $282,487 for the current year. Included in federal taxable income are the following income and deductions:
$12,000 of Vermont rental income.
City of Orono, Maine, bond interest of $10,000.
$10,000 of dividends.
$2,498 of state tax refund included in income.
$32,084 of state net income tax expense.
$59,234 of federal depreciation.
Other relevant facts include:
Assume that the New York sales are to a single customer who is a retailer and can provide a valid New York reseller's certificate.
Maine state depreciation for the year was $47,923, and Maine doesn't allow deductions for state income taxes.
The employees present in Connecticut, Massachusetts, and Rhode Island are salespeople who perform only activities protected by Public Law 86-272.
Assume that each of the states is a separate-return state.
HH's payroll is as follows:
Payroll
State Wages
Connecticut $ 94,231
Maine 392,195
Massachusetts 167,265
Rhode Island 92,391
Vermont 193,923
Total $ 940,005
HH's property is as follows:
Property
State Beginning Ending Rented
Maine $ 938,234 $ 937,652
Vermont 329,134428,142 $ 12,000
Total $ 1,267,368 $ 1,365,794 $ 12,000
Note: Leave no answer blank. Enter zero if applicable. Except as directed, round your final answers to the nearest whole dollar amount.
a. Determine the states in which HH has sales tax nexus, assuming these states have passed Wayfair legislation.
b. Calculate the sales tax HH must remit assuming the following (hypothetical) sales tax rates:
Connecticut (6 percent)
Maine (8 percent)
Massachusetts (7 percent)
New York (8.875 percent)
Rhode Island (5 percent)
Vermont (9 percent)
c. Determine the states in which HH has income tax nexus and an income tax filing requirement.
d. Determine HH's state tax base for Maine, assuming federal taxable income of $282,487.
e. Calculate business and nonbusiness income.
f. Determine HH's Maine apportionment factors using the three-factor method (assume that Maine is a throwback state).
g. Calculate HH's business income apportioned to Maine.
h. Determine HH's allocation of nonbusiness income to Maine.
i. Determine HH's Maine taxable income.
j. Calculate HH's Maine income tax liability, assuming a Maine income tax rate of 5 percent.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Cost Accounting

Authors: Michael W Maher, William N. Lanen, Madhav V. Rajan

1st Edition

0073018376, 978-0073018379

More Books

Students also viewed these Accounting questions

Question

Which alternative is preferable at a point of indifference?

Answered: 1 week ago

Question

undertake a thematic analysis of your data;

Answered: 1 week ago