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acct 432 mid term > Midterm > Flashcards

Midterm Flashcards

1
Q

What are the various types of tax?

A

(1) income taxes, (2) franchise taxes, (3) Sales/use tax, (4) property taxes, (5) excise taxes, (6) value added tax, (7) gross receipts taxes, (8) payroll taxes, (9) estate taxes

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2
Q

What is a franchise tax?

A

Tax based on the net worth of a business (not a tax on profits of franchisor

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3
Q

Do most states have income tax

A

Yes

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4
Q

How many states don’t have income tax?

A

4

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5
Q

Which states don’t have personal income tax?

A

Florida, Texas, South Dakota

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6
Q

What line of the federal tax return does state return begin?

A

Either line 28 or line 30

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7
Q

What is a sales/use tax?

A

Tax on purchases of tangible personal property on the end user collected by the vendor

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8
Q

What is income tax?

A

Equals Sales receipts - Expenditures

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9
Q

When does a state use use tax?

A

When sales tax doesnt exist

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10
Q

How are property taxes determined?

A

Fair market appraisal

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11
Q

What are excise taxes?

A

A narrowly defined tax (i.e gas, cigarettes, firearms

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12
Q

What is a value added tax?

A

Tax on value added to product in manufacturing process

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13
Q

What is a gross receipts tax?

A

tax on vendor vs a sales tax - based on ultimate consumer of last person in the process

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14
Q

What are payroll taxes?

A

Social security, FICA, FUTA, SUI

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15
Q

What is an estate tax?

A

Transfer tax from you to your estate when you pass

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16
Q

What are the limitations to states to tax?

A

(1) Due process, (2) commerce clause, (3) supremacy clause, (4) equal protection clause, (5) privilege / immunity clause, (6) import / export clause, (7) first amendment

17
Q

What are the three method to value property?

A

Cost approach, Income approach, Sales comparison approach

18
Q

What are the characteristics of real and personal property?

A
  1. annexation to the realty, 2. adaptation to the realty, 3. intent
19
Q

How do you determine property tax?

A

Property tax x Assessment level X State equalization factor

20
Q

When would you use the cost approach?

A

New residential structures - equals sum of land and depreciated value of improvements

21
Q

When would you use the income approach?

A

On an office space building

22
Q

What does the cost approach equal?

A

The cost to rebuild or replace the building

23
Q

What does the income approach equal?

A

I R V - income, market rate, value

24
Q

How does the sales comparison approach work?

A

Compare the property being appraised to ones being sold

25
Q

How are property taxes paid?

A

Always in arrears

26
Q

What happens if you don’t like the property tax assessed?

A

You can appeal to the assessor or board of review. Asssesor can lower tax bill - Board of review can lower or always raise your taxes a result of review

27
Q

What does nexus mean?

A

A minimum connection to the state for business transactions

28
Q

What is the due process clause?

A

14th amendment means a state cannot add laws restricting business without a justification or reason

29
Q

What is the Commerce clause?

A

10th amendment which allows regulation of interstate and intrastate commerce.

30
Q

What are the police powers give to states?

A

(1) health, (2) safety, (3) moral, (4) general welfare

31
Q

What are sunday “blue laws”

A

i.e can’t sell cars on sunday, can’t sell liquor on sunday

32
Q

What were the results of complete auto transit v brady case?

A

(1) the activity taxed has to have substantial nexus to state, (2) the tax doesn’t discriminate against against interstate commerce, (3) tax is fairly apportioned, (4) tax is fairly related to benefits provided by the taxing state

33
Q

What are two allocation tests?

A

transactional test - interest income, tax credit modification, functional test - broader, were assets functionally related to business when you disposed on them

34
Q

How do you calculate the state tax?

A

Federal taxable income + State adjustment - Non business income X apportionable percentage + non business income X statutory tax rate - state tax credits

35
Q

What is the three prong test for apportionment?

A

Property, Payroll, Sales

36
Q

What does double weighted apportionment mean?

A

States double up on the one of the three prongs for the apportionment test (i.e) used sales twice

37
Q

What prong does IL use?

A

A 100% sales factor

38
Q

What is the throwback rule?

A

If one state product does to another state and the new state doesn’t tax income w/o nexus you have to pull back those sales and dump them in another returnl

acct 432 mid term (2 decks)

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