Question

To maintain exempt status, an organization must do which of thefollowing:

A. Satisfy only an organizational test.

B. Satisfy only an operational test.

C. Satisfy both an organizational test and an operationaltest.

D. Satisfy a financial test.

E. Once exempt status is granted, it will continue regardless ofwhether the organizational test and the operational test aresatisfied.

In determining state taxable income, all of the following areadjustments to Federal income except:

	A.	A Federal net operating loss.
	B.	Federal income tax expense.
	C.	Dividends received from other U.S. corporations.
	D.	Wages paid to officers and executives.

Under P.L. 86-272, which of the following transactions by itselfwould create nexus with a state?

	A.	Inspection by a sales employee of the customer’s inventory forspecific product lines.
	B.	Using an independent contractor who acts as a manufacturer’srepresentative for the taxpayer through a sales office in thestate.
	C.	Executing a sales campaign, using an advertising agency actingas an independent contractor for the taxpayer.
	D.	Maintenance of inventory in the state by an independentcontractor under a consignment plan.

In conducting multistate tax planning, the taxpayer should:

	A.	Review tax opportunities in light of their effect on the overallbusiness.
	B.	Exploit inconsistencies among the taxing statutes and formulasof the states.
	C.	Consider the tax effects of the plan after accounting for anynew compliance and administrative costs that it generates.
	D.	All of the above are true.

For most taxpayers, which of the traditional apportionmentfactors yields the greatest opportunities for tax reduction?

	A.	Payroll.
	B.	Property.
	C.	Unitary.
	D.	Sales (gross receipts).