Please read case and answer questions below true or false with an explanation.

Case 7: Case Problem 5, p. 1088 (Mallor 16^th Ed. Chap 41): MeadWestvaco Corp. v. Ill. Dept. of Rev., 128 S.Ct. 1498 (2008).

Mead Corporation, an Ohio corporation in the business of producing and selling paper, packaging, and school and office supplies, also owned Lexis/Nexis, the electronic research service. Either as a separate subsidiary or as a division of Mead, Lexis was subject to Mead's oversight, but Mead did not manage its day-to-day affairs. Mead was headquartered in Ohio, while a separate management team ran Lexis out of its headquarters in Illinois. The two businesses maintained separate manufacturing, sales, and distribution facilities, as well as separate accounting, legal, human resources, credit and collections, purchasing, and marketing departments. Mead's involvement was generally limited to approving Lexis's annual business plan and any significant corporate transactions that Lexis wished to undertake. Mead managed Lexis's free cash, which was swept nightly from Lexis's bank accounts into an account maintained by Mead. The cash was reinvested in Lexis's business, but Mead decided how to invest it. Neither business was required to purchase goods or services from the other. Lexis, for example, was not required to purchase its paper supply from Mead and in fact purchased most of its paper from other suppliers. Neither received any discount on goods or services purchased from the other, and neither was a significant customer of the other. In 1994, Mead sold Lexis for $1.5 billion, realizing a capital gain of over $1 billion. Mead did not report any of this gain as business income on its 1994 Illinois tax return, taking the position that it was nonbusiness income and should be allocated entirely to Mead's domestic state, Ohio.

1. Before a state may impose taxes on the income of a domestic corporation, due process requires that substantial contacts exist between the state and the corporations employees, activities or property and that the tax is fairly proportioned and rationally related to services provided by the state.
2. The unitary business principle, which permits a state to tax an apportioned share of that business' value instead of isolating the value attributable to the intrastate operation, should be applied to Mead Corporation.
3. Mead Corporation is domestic with respect to Ohio and foreign with respect to Illinois, and the income earned by Mead (including the gain on the sale of LexisNexis) can be taxed by Ohio but not Illinois.
4. Mead Corporation can be sued in the states of Ohio and Illinois, because it engaged in business activities in those states; but Mead cannot bring suit in the state of Illinois unless it registered to do business in Illinois.
5. Illinois can (a) require Mead Corporation to comply with public health and safety laws while engaged in intrastate activities, provided those laws do not impose an undue burden on interstate commerce, and (b) regulate the relationship among the corporation and its shareholders.