This Won't Hurt, Inc. (Hurt) sells medical equipment, including IV bags, monitors and needles, to customers in California. Hurt's sales in California are $1,000,000 for the taxable year. Hurt sales personnel solicit orders from customers, and the orders are sent to Hurt headquarters outside California for acceptance or rejection. If accepted, the orders are shipped via common carrier from an inventory located outside California. Hurt has no other activities in California.

California has enacted a tax imposition provision that, among other things, states that any taxpayer with sales in California exceeding $500,000 for a taxable year is subject to a net income tax imposed by California.

In light of California's imposition provision, may California impose a net income tax on Hurt?

A. Yes. The activities of Hurt's sales personnel are not protected under P.L. 86-272.

B. No. All of Hurt's activities are protected activities under P.L. 86-272. Under the Supremacy Clause of the U.S. Constitution, in situations where a federal law and a state law conflict, the federal law must be applied.

C. Yes. All of Hurt's activities are protected activities under P.L. 86-272. However, California's imposition statute takes precedence over federal law under the Comity Clause.

D. No. Under the Quill decision, a substantial nexus under the Commerce Clause requires a physical presence for the imposition of a net income tax.