6) Assume Tennis Pro discovered that one salesman has gone into Arkansas once ea

Question

6) Assume Tennis Pro discovered that one salesman has gone into Arkansas once each year of the past 4 years and performed activities creating both sales and use tax nexus and income tax nexus Assume that Arkansas sales were $25,000 each year. Assume that Arkansas business income would be 200,000 each year and that Tennis Pro's Arkansas apportionment percentage would be 1 percent. Assume there would be no Arkansas nonbusiness income. Ass ume that Arkansas sales and use tax rate was 6.5 percent and corporate income tax rate was 5 percent. What would Tennis Pro's Arkansas sa les and use tax and income tax liability be ignoring any possible penalties and interest?

Explanation / Answer

a) Calculation Tennis pro’s Arkansas sales tax liability:

                      = $25,000*6.5%*4 years

                      = $6,500

     Tennis pro’s Arkansas sales tax liability = $6,500

b) calculation of Tennis pro’s Arkansas income tax liability :

                         = $200,000*1%*5%*4years

                         = $400

Tennis pro’s Arkansas income tax liability = $400

The sales tax and income tax liability of Tennis pro’s Arkansas are $6,500 and $400 respectively

  

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