CPA Exam Lab
Section 2: 30–40%T8

Multi-Jurisdictional and Tax-Exempt Entities

Exam Insight

Businesses operating across state lines must divide income among states using apportionment factors, and the TCP exam tests nexus, the unitary concept, and the throwback rule. Tax-exempt organizations add their own qualification, reporting, and unrelated business income rules that are reliably tested.

CPA Exam Lab is an independent study resource and is not affiliated with, endorsed by, or sponsored by the AICPA® or NASBA. Practice questions are original content created for study purposes. “CPA” is a registered trademark of the AICPA.

What AICPA Wants You to Know

  • 1Determine state nexus and explain when a state may tax an out-of-state business.
  • 2Apportion multistate business income using the sales, payroll, and property factors.
  • 3Explain the unitary business concept and the throwback rule.
  • 4Identify the requirements for Section 501(c)(3) qualification and Form 990 reporting.
  • 5Compute unrelated business income tax (UBIT) and identify exclusions.
  • 6Distinguish private foundations from public charities and their differing rules.