CTC CTC State & Local Tax (SALT)

Question 1

What is 'nexus' in the context of state and local taxation?

Accepted Answer

A sufficient connection between a business and a state that creates a tax obligation

Answer

A minimum threshold of taxable income

Answer

A type of interstate tax treaty

Answer

A federal standard for apportioning income

Question 2

Under the Supreme Court's South Dakota v. Wayfair (2018) decision, what threshold did South Dakota use to establish economic nexus for sales tax?

Accepted Answer

$100,000 in sales or 200 transactions

Answer

$50,000 in sales or 100 transactions

Answer

$200,000 in sales or 500 transactions

Answer

$500,000 in sales or 1,000 transactions

Question 3

Which method is most commonly used by states to apportion multistate corporate income to their state?

Accepted Answer

Single-factor sales formula

Answer

Single-factor payroll formula

Answer

Three-factor formula (sales, property, payroll)

Answer

Two-factor formula (sales and property)

Question 4

What is 'use tax' and when does it typically apply?

Accepted Answer

A complementary tax owed when sales tax was not collected by the seller

Answer

A tax on business use of depreciable assets

Answer

A federal excise tax on consumer goods

Answer

A local tax on commercial real estate use

Question 5

Which Public Law limits states from taxing the income of a business whose only in-state activity is soliciting orders for goods shipped from outside the state?

Accepted Answer

Public Law 86-272

Answer

Public Law 94-455

Answer

Public Law 91-172

Answer

Public Law 99-514

Question 6

A company sells products in 10 states and has physical locations in only 3. Under economic nexus rules, what determines its filing obligations in the other 7 states?

Accepted Answer

Whether it meets each state's sales or transaction thresholds

Answer

Only the location of its principal office

Answer

The Federal nexus standard set by the IRS

Answer

Whether it files a consolidated federal return