MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the

question.

1) Which of the following isn't a typical federal/state adjustment?

A) Meals. B) U.S. obligation interest income.

C) Dividends received deduction.

D) Depreciation.

2) Public Law 86-272 protects solicitation from income taxation. Which of the following activities exceeds the solicitation threshold?

A) Checking a customer's inventory.

B) Accepting a down payment.

C) Any form of advertising.

D) Distribution of samples without charge.

3) Bethesda Corporation is unprotected from income tax by Public Law 86-272. Which of the following characteristics creates a problem for Bethesda in states other than Maryland?

A) Bethesda does business in Maryland and five other states.

B) All orders are approved in Maryland.

C) All in-state services are limited to solicitation in states other than Maryland.

D) Bethesda sells copier equipment and copy center services

4) Which of the following sales is always subject to sales and use tax in a state that assesses a sales and use tax?

A) Inventory.

B) Food.

C) Tax preparation services.

D) Automobiles.

5) Which of the following regarding the state tax base is incorrect?

A) It applies only to interstate businesses.

B) It is divided into business and nonbusiness income.

C) It is computed by making adjustments to federal taxable income.

D) It is a necessary step in the state income tax process

6) Which of the following law types is not a primary authority source?

A) Treatises

B) Judicial

C) Administrative

D) Legislative

7) Pierre Corporation has a precredit U.S. tax of $315,000 on $1,500,000 of taxable income in 2018. Pierre has $300,000 of foreign source taxable income characterized as foreign branch income and $150,000 of foreign source taxable income characterized as passive category income. Pierre paid $60,000 of foreign income taxes on the foreign branch income and $15,000 of foreign income taxes on the passive category income. What amount of foreign tax credit (FTC) can Pierre use on its 2018 U.S. tax return and what is the amount of the carryforward, if any?

A) $13,500 FTC with $61,500 carryforward

B) $75,000 FTC with $0 carryforward

C) $13,500 FTC with $0 carryforward

D) $315,000 FTC with $0 carryforward

8) Which of the following expenses incurred by a U.S. corporation is not subject to special apportionment rules for foreign tax credit purposes?

A) Advertising

B) Interest

C) Research and experimental

D) State and local income taxes

9) Ames Corporation has a precredit U.S. tax of $210,000 on $1,000,000 of taxable income in 2018. Ames has $600,000 of foreign source taxable income and paid $120,000 of income taxes to the U.K. government on this income. All of the foreign source income is treated as foreign branch income for foreign tax credit purposes. Ames's foreign tax credit on its 2018 tax return will be:

A) $120,000

B) $210,000

C) $126,000

D) $72,000

10) Absent a treaty provision, what is the statutory withholding tax rate imposed by the United States on a dividend paid by a U.S. corporation to a resident of Denmark?

A) 30%

B) 15%

C) 0%

D) 5%

11) This year Don and his son purchased real estate for an investment. The price of the property was $500,000, and the title named Don and his son as joint tenants with the right of survivorship. Don provided $320,000 of the purchase price and his son provided the remaining $180,000. Has Don made a taxable gift and, if so, in what amount?

A) Don has made a taxable gift of $70,000.

B) Don has made a taxable gift of $55,000.

C) Don has made a taxable gift of $22,000.

D) Don has made a taxable gift of $205,000.

E) None of the choices are correct - Don did not make a taxable gift.

12) At her death Emily owned real estate worth $2.5 million and other property worth $10 million. Property taxes of $200,000 were accrued on the real estate at the time of Emily's death. Which of the following is a true statement with respect to these items without considering any other owned property?

A) Emily's adjusted gross estate is $12.3 million.

B) Emily's estate tax base is $12.5 million.

C) Emily's gross estate is $12.3 million.

D) Emily's taxable estate is $12.5 million.

E) None of the choices are true.

13) At his death Titus had a gross estate consisting of $6 million of property. Which of the following is a true statement about Titus' estate or estate tax?

A) Titus must have a probate estate of at least $6 million.

B) Titus must have a tentative transfer tax calculated on at least $2 million of transfers.

C) Titus must have an adjusted gross estate of at least $6 million.

D) Titus must have cumulative taxable transfers of at least $6 million.

E) None of the choices are necessarily true.

14) Wacky Wendy produces gourmet cheese in Wisconsin. Wendy has sales as follows: Wendy's Sales: State Sales Iowa $ 350,512 Michigan $ 134,589 Minnesota $ 849,142 Wisconsin $ 1,323,032 Totals $ 2,657,275 Wendy is a Wisconsin Corporation and has the following operations: Wendy has income tax nexus in Iowa, Minnesota, and Wisconsin. The Michigan sales are shipped from Wisconsin (a throwback state). $100,000 of the Wisconsin sales were to the federal government. What is Wendy's Wisconsin sale numerator?

A) $1,323,032

B) $1,457,621

C) $1,357,621

D) $1,223,032

15) Which of the items is correct regarding a use tax?

A) Use taxes are imposed by every state.

B) States choose to implement either a sales tax or a use tax but not both.

C) Amazon collects use taxes on behalf of all its resellers.

D) Use taxes only apply when the seller is not required to collect the sales tax

16) Russell Starling, an Australian citizen and resident, received the following investment income during 2018: $5,000 of dividend income from ownership of stock in a U.S. corporation, $10,000 interest from a certificate of deposit in a U.S. bank, $3,000 of interest income earned from a loan to Clint Westwood, a U.S. citizen, and $2,000 capital gain from sale of a stock in a U.S. corporation. How much of Russell's income will be subject to U.S. taxation in 2018?

A) $10,000

B) $8,000

C) $20,000

D) $15,000

17) Which of the following is a true statement?

A) An executor can choose to deduct the decedent's funeral expenses on either the estate tax return or the estate's income tax return.

B) Funeral expenses for the decedent paid by an estate are deductible in computing the adjusted gross estate.

C) An executor can only deduct the costs of administering the decedent's estate on the estate's income tax return.

D) Executor's fees paid by an estate are deductible in computing the gross estate.

E) None of the choices are true.

18) On which of the following transactions should sales tax generally be collected?

A) Sales of woolen goods to a state without sales tax nexus delivered through common carrier.

B) Architecture plans delivered through the mail.

C) Meal purchased at McDonald's.

D) Accounting services provided in Alaska.

19) Which of the following exceptions could cause subpart F income to be excluded from the deemed dividend regime?

A) The full inclusion rule only

B) The de minimis rule and the high tax rule could cause subpart F income to be excluded from the deemed dividend regime.

C) The de minimis rule only

D) The high tax rule only

20) Ethan owned a vacation home at the time of his death. Which of the following is a true statement if Ethan was married to Emma and resided in a common law state at the time of his death?

A) Ethan can claim a charitable deduction if he bequeaths it to a qualified charity.

B) Ethan can claim a marital deduction for the vacation home if he bequeaths it to Emma.

C) Ethan cannot claim a marital deduction if he bequeaths a life estate in the vacation home to Emma.

D) Ethan can claim a marital deduction for half the value of the vacation home if it was owned with Emma in joint tenancy with the right of survivorship.

E) All of the choices are true.