Intermediate Managerial and Tax Accounting, Homework

Intermediate Managerial and Tax  Accounting ACCTG 325, Fall 2024  Exercise 1

Chapter 1, Taxes and Taxing Jurisdictions

Name _________________________________ RedID# _______________________________

1. In each of the following cases, determine if the United States has jurisdiction to tax Mrs. May. (Yes or No) a. Mrs. May is a citizen of Brazil but is a permanent resident of Orlando, Florida. _____________________

b. Mrs. May is a citizen and resident of Brazil. She owns Manhattan real estate that generates $100,000 net rental income annually. _________________________________________________________________

c. Mrs. May is a citizen and resident of Brazil. She owns no property and conducts no business in the United States. _______________________________________________________________________________

d. Mrs. May is a U.S. citizen but is a permanent resident of Sao Paulo, Brazil. ________________________

2. The city of Springvale levies a tax on the value of real property located within the county. The tax equals 3 percent of the property’s assessed value up to $2 million plus 1 percent of the value in excess of $2 million.

a. Compute the tax on real property valued at $1.3 million. _______________________________________ b. Compute the tax on real property valued at $4.5 million. _______________________________________

3. Ms. Pike, who lives in California, traveled to Oregon to purchase gold jewelry for $20,000. California has a 7.5 percent sales and use tax, while Oregon has no sales and use tax.

a. Compute the use tax that Ms. Pike owes to California on the jewelry purchased in Oregon.

b. Compute the use tax that Ms. Pike owes to California if she purchased the jewelry in New Mexico and paid that state’s 5.125 percent sales tax on the transaction.

4. Wallis Company produces circuit boards in a foreign country that imposes a 15 percent VAT. This year, Wallis manufactured 8.3 million boards at a $5 material cost per unit. Wallis sold the boards to various customers for $7.50 per unit. How much VAT does Wallis Company owe?

5. The management of Nixon Company must decide between locating a new branch office in foreign jurisdiction F or foreign jurisdiction G. Regardless of location, the branch operation will use tangible property (plant and equipment) worth $10 million and should generate annual gross receipts of $2 million. Jurisdiction F imposes an annual property tax of 4 percent of the value of business property and a 15 percent gross receipts tax. Jurisdiction G imposes no property tax but imposes a 30 percent gross receipts tax. Solely on the basis of these facts, should Nixon locate its new branch in Jurisdiction F or Jurisdiction G? Show your calculations.