Question

When a state exerts the right to tax a business based on factors beyond a physical presence, such as providing infrastructure like phone lines, they have invoked:

A) Corporate tax nexus
B) Sales tax nexus
C) Income tax nexus
D) Property tax nexus

Answer 1

When a state exerts the right to tax a business based on factors beyond a physical presence, such as providing infrastructure, they have invoked Corporate tax nexus.

Step-by-step explanation:

When a state exerts the right to tax a business based on factors beyond a physical presence, such as providing infrastructure like phone lines, they have invoked Corporate tax nexus.

Corporate tax nexus refers to the connection or sufficient presence of a business in a state that allows the state to impose a tax on the business's income or profits. This nexus can be established through factors like sales or revenue generated in the state, employees working in the state, or the use of state-provided infrastructure.

If a business operates online and generates significant sales revenue from customers in a particular state, even without a physical presence in that state, the state may assert its right to tax the business based on the corporate tax nexus.