Marquardt Corporation realized $900,000 taxable income from the sales of its products in States X and Z. Marquardt's activities establish nexus for income tax purposes in both states. Marquardt's sales, payroll, and property among the states include the following:
State X State Z Totals
Sales $1,000,000 $3,000,000 $4,000,000
Property 2,000,000 -0- 2,000,000
Payroll 1,000,000 -0- 1,000,000
Z utilizes an equally weighted three-factor apportionment formula. Marquardt is incorporated in X. How much of
Marquardt's taxable income is apportioned to Z?

Question

Quizplus · Accepted Answer

Z utilizes an equally weighted three-factor apportionment formula, so each factor (sales, property, and payroll) is given equal weight. Marquardt's sales in Z are $3,000,000, its property in Z is $0, and its payroll in Z is $0. Therefore, Marquardt's apportionment factor for Z is (3,000,000 + 0 + 0) / (4,000,000 + 2,000,000 + 1,000,000) = 0.75. Thus, Marquardt's taxable income apportioned to Z is $900,000 * 0.75 = $675,000.

Marquardt Corporation Realized $900,000 Taxable Income from the Sales of Its