SW FEDERAL TAXATION 2020 LOOSE W/ACCESS
23rd Edition
ISBN: 9780357251942
Author: Raabe
Publisher: Cengage Learning
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Suppose a state imposes a higher tax on out-of-state companies doing business in the state than it imposes on in-state companies. Is this a violation of the equal protection clause if the only reason for the tax is to protect the local firms from out-of-state competition?
Why would a company have a physical headquarters in one state but file for incorporation in another state?
O Employees pay income taxes based on the rates of the chartering state, so a company may choose to charter in a state with
lower income taxes.
O Customers trust large companies, so a company may choose to charter in a separate state to give the appearance of being a
national company.
O Interstate litigation is very complex, so a company may choose to charter in a separate state to make it more difficult to sue
the company.
States vary in the laws that govern corporations, so a company may choose to charter in a state with more favorable
corporate laws.
Question: Suppose a state imposes a higher tax on out-of-state companies doing business in the state than it imposes clause if the only reason for the tax is to protect the local firms from out-of-state competition? in-state companies. Is this a violation of the equal protection
Explain your answer thouroughly and in a manner that a person with no prior knowledge of the situation would understand it fully.
For this I need more details all I can answer is .....Yes. The tax would limit the liberty of some persons (out-of-state businesses), so it is subject to a review under the equal protection clause. Protecting local businesses from out-of-state competition is not a legitimate government objective. Thus, such a tax would violate the equal protection clause.
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- If the assumption that companies pay no tax in Modigliani & Miller Proposition is relaxed, while the other two assumptions still hold, how will the value of a company be affected?arrow_forwardProvide an example of how a US taxpayer that manufactures the property which that taxpayer sells could increase its net foreign source income. Next, assume instead the US taxpayer doesn’t manufacture but rather is a reseller of a finished good. Provide an example of how a reseller could increase its net foreign source income. Lastly, why is it generally better for a US taxpayer to increase its net foreign source income if it is subject to US tax on a worldwide basis?arrow_forwardWhat will be the effect after To complete a successful tax-deferred exchange for the investor?arrow_forward
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