38480406
Description
Flashcards by Brandie Westhart, updated more than 1 year ago
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Created by Brandie Westhart
almost 2 years ago
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| Question | Answer |
| Allocation | the method of dividing or sourcing nonbusiness income to specific states. |
| Apportionment | the method of dividing business income of an interstate business among the states where nexus exists. |
| Business income | income derived from business activities. |
| Commercial domicile | the state where a business is headquartered and directs operations; this location may be different from the place of incorporation. |
| Economic income tax nexus | the concept that businesses without a physical presence in the state may establish income tax nexus in the state through an economic presence there. |
| Federal/state adjustments | amounts added to or subtracted from federal taxable income when firms compute taxable income for a particular state. |
| Income tax nexus | the connection between a business and a tax jurisdiction sufficient to subject the business to the tax jurisdiction’s income tax. |
| Interstate commerce | business conducted between parties in two or more states. |
| Nexus | the connection between a business and a tax jurisdiction sufficient to subject the business to the tax jurisdiction’s tax system. Also, the connection that is required to exist between a jurisdiction and a potential taxpayer such that the jurisdiction asserts the right to impose a tax. |
| Nonbusiness income | all income except for business income—generally, investment income and rental income. |
| Nondomiciliary business | a business operating in a state other than its commercial domicile. |
| Public Law 86-272 | federal law passed by Congress that provides additional protection for sellers of tangible personal property against income tax nexus. |
| Sales tax | a tax imposed on the retail price of goods (plus certain services). Retailers are responsible for collecting and remitting the tax; typically sales tax is collected at the point of sale. |
| Sales tax nexus | the connection between a business and a tax jurisdiction sufficient to subject the business to the tax jurisdiction’s sales tax. |
| Separate tax return | a state tax return methodology requiring that each related entity with nexus must file a separate tax return. |
| Solicitation | selling activities or activities ancillary to selling that are protected under Public Law 86-272. |
| State tax base | the federal taxable income plus or minus required state adjustments. |
| Throwback rule | the rule that sales into a state without nexus are included with sales from the state the property was shipped from. |
| Trade show rule | a rule that permits businesses to have physical presence at conventions and trade shows, generally up to two weeks a year, without creating nexus. |
| Unitary tax return | a state tax return methodology requiring the activities of a group of related entities to be reported on a single tax return. The criteria for determining whether a group of entities must file a unitary tax return are functional integration, centralization of management, and economies of scale. |
| Use tax | a tax imposed on the retail price of goods owned, possessed, or consumed within a state that were not purchased within the state. |
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