South Carolina Contractor License Exam — All Questions

When a South Carolina contractor buys materials to be permanently installed under a lump-sum contract, who generally owes the sales or use tax on those materials?

• a.No one; construction materials are always exempt
• b.The owner, on the full contract price
• c.The contractor, as the consumer of the materials✓
• d.The project architect

A lump-sum real-property contractor is treated as the consumer of the materials and owes sales or use tax on the cost of those materials, rather than collecting tax from the owner like a retailer. The tax becomes a cost built into the bid.S.C. sales and use tax (contractor as consumer of materials)

The gross FUTA (federal unemployment) rate is 6.0% on the first $7,000 of each employee's wages. With the full credit for state unemployment tax paid on time, what is the effective FUTA rate?

• a.6.0%
• b.1.45%
• c.0.6%✓
• d.5.4%

The full 5.4% state credit reduces the 6.0% gross rate to an effective 0.6% (a maximum of about $42 per employee per year). FUTA is paid entirely by the employer and is never withheld from the employee.IRS Form 940 (FUTA rate and state credit)