Under a "Component Part/physical Ingredient" Rule for Determining the Exemption

question 7

Multiple Choice

Under a "component part/physical ingredient" rule for determining the exemption of business purchases under a state sales and use tax, which of the following purchases would probably not be exempt from the sales tax?

• A) Purchase by a local clothing store of shirts for resale to customers.
• B) Purchase by Chrysler Corporation of tires to be placed on Dodge vans for sales to the public
• C) Purchase of sesame seed buns by a McDonald's restaurant.
• D) Purchase of clothing display racks by a local clothing store.

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Definitions:

Depression

A common and serious medical illness that negatively affects how one feels, thinks, and acts, leading to feelings of sadness and/or a loss of interest in activities once enjoyed.

Anorexia Nervosa

An eating disorder characterized by an obsessive fear of gaining weight, leading to severe restrictions on food intake and extreme weight loss.

Fatal

Resulting in death or having a very severe outcome with irreversible consequences.

High-Fat Foods

Refer to foods that are rich in fats, often associated with increased calories and potential health impacts when consumed excessively.