QUESTION 7

1. Roxy operates a dress shop in Arlington, Virginia. Lisa, a Maryland resident, comes in for a measurement and purchases a $1,500 dress that is shipped to her Maryland residence using a common carrier. Assuming that Virginia's sales tax rate is 5 percent and that Maryland's sales tax rate is 7 percent, what is Roxy's sales and use tax liability?

   		$90 to Maryland.
   		$75 sales tax to Virginia and $15 use tax to Maryland.
   		$75 to Virginia.
   		$0.

1. PWD Incorporated is an Illinois corporation. It properly included, deducted, or excluded the following items on its federal tax return in the current year:

   Item	Amount		Federal Treatment
   Illinois Income Taxes	$	33,333	Deducted on federal return
   Indiana Income Taxes	$	18,500	Deducted on federal return
   Ohio Commercial Activity Tax	$	4,000	Deducted on federal return
   Illinois Municipal Bond Interest	$	10,000	Excluded from federal return
   Indiana Municipal Bond Interest	$	15,000	Excluded from federal return
   Federal T-Note Interest	$	2,500	Included on federal return

   PWD's Federal Taxable Income was $100,000. Calculate PWD's Illinois state tax base.

   		$164,333
   		$116,000
   		$131,000
   		$130,833