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Cass has a business with her twin selling boutique skin care products, Luxurious Lopez (LL). They started off selling at their local San Diego farmers markets. But when they started selling on Etsy their business really took off. LL is headquartered in San Diego, California. LL has sales, employees, property, and commercial domicile as follows:

1. Determine the states in which LL has sales tax nexus, assuming these states have passed Wayfair legislation.

2. Determine the states in which LL has income tax nexus.

3. Determine LLs California apportionment factors using the three-factor method (assume California is a throwback state).

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8. Happy Hippos (HH) is a manufacturer and retailer of New England crafts headquartered in Camden, Maine. HH provides services and has sales, employees, property, and commercial domicile as follows:

• HH has commercial domicile in Maine

• HH has federal taxable income of $282,487 for the current year. Included in federal taxable income are the following income and deductions:

  1. $12,000 of Vermont rental income.

  2. City of Orono, Maine, bond interest of $10,000.

  3. $10,000 of dividends.

  4. $2,498 of state tax refund included in income.

  5. $32,084 of state net income tax expense.

  6. $59,234 of federal depreciation.

• Assume that the New York sales are to a single customer who is a retailer and can provide a valid New York resellers certificate.

• Maine state depreciation for the year was $47,923, and Maine doesnt allow deductions for state income taxes.

• The employees present in Connecticut, Massachusetts, and Rhode Island are salespeople who perform only activities protected by Public Law 86-272.

• Assume that each of the states is a separate-return state.

1. Determine the states in which HH has sales tax nexus, assuming these states have passed Wayfair legislation

2. Calculate the sales tax HH must remit assuming the following (hypothetical) sales tax rates:

   • Connecticut (6 percent)

   • Maine (8 percent)

   • Massachusetts (7 percent)

   • New York (8.875 percent)

   • Rhode Island (5 percent)

   • Vermont (9 percent)

3. Determine the states in which HH has income tax nexus.

4. Determine HHs state tax base for Maine, assuming federal taxable income of $282,487.

5. Calculate business and nonbusiness income.

6. Determine HHs Maine apportionment factors using the three-factor method (assume that Maine is a throwback state).

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