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Definition
- levied on tangible personal property and some services
- exemptions vary state to state but usually include items bought for resale and that are used in manufacturing
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Term
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Definition
levied on use of tangible personal property that wasn't purchased in state |
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4 rules for property taxes |
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Definition
- based on value of real property and personal property
- exemptions for inventory
- some states also tax intangible property
- levied for property owned at a specific date
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Term
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Definition
- levied on privilege of doing business in a state
- based on the value of the capital used in the jurisdiction (common stock, paid-in-capital, and retained earnings)
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Definition
- levied on the quantity of an item or sales price
- can be charged to consumer or manufacturer
- examples include gas, booze, cigarettes
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Term
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Definition
levied on taxable wages with a per employee limit (usually $7000) |
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Term
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Definition
charges for incorporating in a state or registering to do business in a state |
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4 Supreme Court developed tests to determine jurisdiction to tax |
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Definition
- business activity must have substantial nexus with state
- tax must be fairly apportioned
- tax can't discriminate against interstate commerce
- tax must be fairly related to services that the state provides
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Term
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Definition
degree of the relationship that must exist between a state and a foreign corporation to have the right to impose tax |
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Term
4 situations in which nexus doesn't exist if activity is limited to |
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Definition
- soliciting sales of tangible personal property that are approved and shipped outside the state
- advertising
- determining reorder need of customers
- furnishing autos to sales staff
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Term
7 sufficient activities to cause nexus |
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Definition
- approving/accepting orders
- hiring/supervising/training employees other than sales staff
- installation
- maintaining an office or warehouse
- providing maintenance or engineering services
- making repairs
- investigating credit worthiness or collecting delinquent accounts
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Term
2 business income classification tests |
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Definition
- generated from business's regular operations (transactional test)-OR-
- from sale of property that is an integral part of the business
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Term
business income when nexus in more than one state |
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Definition
apportioned among all the states in which the corporation does business |
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Term
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Definition
- investment income and income from transactions not part of regular operations.
- allocated to state of incorporation
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Term
3 factors for business income apportionment |
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Definition
- sales factor=total sales in state/total sales
- property factor= avg value of prop in state/value of all prop
- payroll factor=compensation paid or accrued in state/total compensation paid or accrued
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Term
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Definition
state is determined by point of delivery unless business doesn't have nexus in that state (state then is where sale originated) |
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Term
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Definition
- limited to real property and tangible personal property (not cash)
- includes leased property (annual lease X 8)
- only included if used for production of business income
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Term
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Definition
- compensation includes fringe benefits if taxable under federal law
- payments to independent contractors and paid into sec. 401(k) plans usually not included
- included only if relates to production of business income
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Term
4 pieces of Uniform Division of Income for Tax Purposes Act |
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Definition
- adopted to promote uniformity in state allocation and apportionment rules.
- says income goes to state with greatest cost-of-performance
- intangible assets excluded
- TP can petition for things if unhappy with result
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Term
requirements of unitary groups (combining transactions on one return) |
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Definition
- ownership-more than 50%
- opeerations
- use- centralized management
can be included: partnerships, business even if not nexus |
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Term
State Income Tax Computation (starting at federal taxable income) |
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Definition
add: DRD, expenses related to interest earned on U.S. bonds, state income taxes, depreciation in excess of that allowed for state, and municipal interest taxed for state purposes
subtract: federal income taxes paid, expenses related to municipal interest income, interest on U.S. bonds, and depreciation in addition to that allowed for federal purposes |
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Term
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Definition
foreign if received from a foreign resident or for property used in a foreign country |
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Term
sourcing for income from sale of personalty |
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Definition
based on resident of seller except...
- inventory sourced where title transfers
- for depreciable property, recapture is sourced where depreciation was claimed and remaining gain is sourced where title transfers
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Term
sourcing for sale of intangibles |
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Definition
where amortization was claimed. |
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Term
sourcing for use of intangibles |
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Definition
country in which property was used |
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Term
sourcing for sale or exchange of real property |
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Definition
based on location of the property |
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Term
sourcing for use of tangible real property |
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Definition
country in which property is located |
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Term
interest income is u.s. source if received from what 3 types of entities |
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Definition
- u.s. government
- noncorporate u.s. residents
- domestic corporations
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Term
when would interest received from a u.s. corporation be considered foreign source? |
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Definition
when the corporation has received more than 80% of its active business income from foreign sources over the past 3 years |
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Term
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Definition
from u.s. corporation=u.s. source, foreign corporation = foreign source |
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Term
when would dividends received from a foreign corporation be considered U.S. source?
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Definition
when the foreign corporation receives more than 25% of its gross income of the last 3 years from income connected with a U.S. business |
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Term
assets transfered from U.S. corporation to a foreign corporation |
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Definition
if used in a trade or business outside the U.S., gain is deferred unless the property is...
- inventory
- installment obligations
- foreign currency
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Term
Controlled Foreign Corporations (CFC) |
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Definition
a foreign corporation for which more than 50% of the voting power or value of stock is owned by U.S. shareholders (limited to those who own, direct and indirect, 10% or more of the company) on any day of the tax year |
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Term
2 types of income of CFC that is taxed to U.S. shareholders as constructive dividend (Subpart F income) |
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Definition
- income not connected economically to the country in which the corporation is organized
- income from insuring the risk of loss from outside the country in which the corporation is orgainzed
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Term
limitation rule for foreign taxes paid credit |
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Definition
if U.S. effective tax rate > foreign effective rate then the credit is limited to
U.S. tax on worldwide income X (foreign sourse taxable income / Worldwide taxable income) |
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Term
qualification rules for individuals to be eligible for foreign-earned income exclusions |
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Definition
- during a continuous periods that includes an intire tax year, individual must be a bona fide resident of at least one foreign country OR
- must have a tax home in a foreign contry and must have been present in one or more foreign countries for at least 330 days during any 12 consecutive months (if there for 330-365 days, exclusion is pro-rated on daily basis)
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Term
2 exclusion examples of foreign-income for qualified individuals |
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Definition
- foreign-earned income from personal services, limited to $92,900 in 2011
- employer provided foreign housing income, limited to $13,006 in 2011 (only to the extent it exceeds $14,864 in 2011)
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Term
2 rules for foreign currency gains and losses |
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Definition
- g/l resulting from the normal course of business operations are ordinary
- g/l resulting from investment or personal transactions are capital
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