True or False 1. PL 86-272 prohibits a state form imposing a sales tax on income derived from within the state from interstate commerce if the only business activity within the state is the solicitation of orders for tangible personal property, provided that the orders are approved and filled outside of NY. 2. A NY domestic corporation will be subject to the NY franchise tax only if it maintains an office in NY. 3. Income, loss and deductions received by C-corporation flows through to its shareholders on an annual basis. 4. A NY domestic corporation which satisfies the requirements of PL 86-272, will not be subject to NY corporate income tax. 5. Under PL 86-272, an out-of-state seller is not considered engaged in business within a state if sales or solicitation in that State are made on behalf of seller by independent contractor or the independent contractor maintains an office in the state through which the independent contractor sells and solicits orders for out-of-state sellers. 6. Every corporation that is a limited partner in a NY partnership has nexus with New York 7. New York imposes a corporate franchise tax on all domestic corporations which are incorporated in the state and on foreign corporations for (1) doing business, (2) employing capital in NY, (3) owning or leasing property in NY, (4) maintaining an office in NY or (5), satisfies the economic nexus requirement. 8. New York City imposes the general corporations tax on the taxable income of all corporations except for those corporations which elect to be taxed as S-corporations. 9. The worldwide income from a foreign corporation that solely owns a warehouse in New York, but does no business in New York, is subject to New York franchise tax.

10. Corporations with only U.S. residents and citizens are eligible to make the S-corporation election. 11. Any business entity can elect its tax entity status under the check-the-box regulations 12. For tax purposes, there are only four types of business entities: c-corporation, partnerships, LLCs and sole proprietorships. 13. S-corporation status is elective under NYS law, requiring an election for any corporation wants to be treated as an s-corporation 14. New York State imposes the corporate franchise tax on the taxable income of an s-corporation. 15. Under NY law, a partnerships income is allocated based on either (1) a method of accounting that is to the satisfaction of the commissioner or (2) an allocation using a three-factor formula comprising property, payroll and receipts of the partnership from in-state and out-of-state sources 16. Check the box elections made at the federal level are respected by New York State and New York City, so that if an entity elects to be treated as a corporation at the federal level, it will also be treated as a corporation at the State and City level. 17. A foreign corporation that does not have nexus with NYS/NYC can still be subject to NY taxation if the foreign corporation is a partner in a partnership that has nexus with NYS/NYC. 18. An S-corporation shareholder can take a flow-through loss only if they have basis in their S-corporation stock. 19. Mere Co-ownership of property that is maintained, kept in repair, and rented or leased does not constitute a separate entity under the check-the-box regulations 20. A foreign corporation that does not have nexus with NYS/NYC is a limited partner in a partnership that has nexus with NYS/NYC. The foreign corporation owns .08% interest in the partnership and its basis in the partnership is $500,000. The foreign corporation has NY receipts of $450,000.00 and the partnership has NY receipts of $550,000.00. The foreign corporation has nexus with NYS/NYC.

21. NY State residents that are shareholders of New York State S-corporations are subject to New York State tax based on their pro-rata share of income received from the S-corporation. 22. Under the check-the-box regulations, a business can elect to be taxed as an LLC for federal income tax purposes. 23. All eligible corporations that want to be taxed as s-corporations in New York are required to make the s-corporation election on Form CT-6. 24. LLCs can be shareholders in an S-corporation. 25. The corporate franchise tax base is the lower of the business income base, the business capital base or the fixed dollar minimum. 26. For franchise tax purposes, apportionment of NY receipts is based on a three-factor formula looking at the payroll, business receipts and real property of the foreign corporation. 27. Receipts from services rendered outside of New York by a foreign corporation may be subject to the NY Franchise tax. 28. The income from a C-corporation is subject to double taxation, first upon the receipt of the income by the corporation and again when the income is reported on the corporations income tax return. 29. A flow-through business entity with no physical presence in New York can never have nexus with New York. 30. NY State non-residents that are shareholders of New York State S-corporations are subject to New York State tax on their pro-rata share of income received from the S-corporation. 31. Income earned by a foreign corporation from royalties for the use of patents, copyrights, trademarks, and similar intangibles are sourced to New York if such intangibles are used at any time within New York State during the tax year. 32. All corporations can engage in combined reporting of their income gains, losses and deductions with other corporations so long as the corporations are engaged in a unitary business with the other corporations. 33. Receipts from the sales of tangible personal property by a foreign corporation are sourced based on the address the property is shipped to, regardless of whether the customer is located at the ship to address. 34. Rents, royalties, interest, dividends, and charitable contributions are all examples of separately stated items of income and deductions. 35. Any corporation that is a general partner in any partnership that has nexus with New York will be subject to New York taxes. 36. A domestic corporation which satisfies the requirements of PL 86-272, will not be subject to NY income tax. 37. NYS provides NYS non-resident taxpayers with a credit for income taxes paid to other states on business income 38. NY State residents that are shareholders of New York State S-corporations are subject to New York City tax on their pro-rata share of income received from the S-corporation. 39. An entity that is incorporated under NY state law as a corporation can elect to be treated as a partnership for federal tax purposes. 40. For New York State and New York City purposes, the income, gain, losses and deductions of an s-corporation flow through to the shareholders and are taxed at the shareholder level. 41. ABC Corporation, an ongoing business taxed as a C-corporation, wants to be taxed as an s-corporation. The c-corporation makes the s-corporation election on June 30, 2013. The corporation will be taxed as a S-corporation for the entire 2014 tax year. 42. A disregarded entity that is owned by an individual, is treated as a sole proprietor, whereby all the profits, gains, losses, and deductions of the disregarded entity flow-through to the owner and are reported on the schedule C. 43. All interest from tax exempt bonds is added back to federal taxable income in determining NYS taxable income. 44. NYS and NYC has adopted a single sales factor for determining the allocation of NY receipts of C-corporations but NYC still uses the three-factor formula for NYS S-corporations. 45. A vendor mailing promotional material to New York based customers for the purposes of advertising its products satisfies the Commerce Clause for purposes of imposing the New York Sales and Use tax. 46. Location of your minor children is a primary factor that auditors are instructed to analyze according to the nonresident audit guidelines. 47. A foreign corporation owns equipment in New York but all other activity is performed in New Jersey. The foreign corporation has nexus for income tax purposes. 48. The effective date on a check the box election can be 75 days before the Form 8832 is filed or 12 months after the Form 8832 is filed. 49. Married couples always have the same domicile. 50. A domestic corporation which satisfies the De Minimus Exception of NYs version of PL 86-272, will not be subject to NY income tax. 51. A partnership that is created under New York law may engage in sales of tangible property that are not subject to income tax pursuant to PL 86-272. 52. A foreign partnership that does no business in New York but maintains an office in New York where it keeps its accounting records is not subject to New York tax 53. In determining the property percentage for purposes of allocating partnership income, real property only includes property that the partnership owns in New York State. 54. A foreign corporation that sends a single employee into NYC to finalize a contract to sell tangible personal property to a NY customer for $2 million dollars that will be approved by the home office in New Jersey and delivered from New Jersey to NY, is subject to the franchise tax and general corporations tax 55. If a foreign corporation owns real property in New York but the real estate is unrelated to the corporations business, and the foreign corporation otherwise has no contacts with New York, it will not have nexus with New York