Bert Corporation, a Calendar-Year Taxpayer, Owns Property in States M $\quad$

Bert Corporation, a calendar-year taxpayer, owns property in States M and O. Both M and O require that the average value of assets be included in the property factor. M requires that the property be valued at its historical cost, and O requires that the property be included in the property factor at its net depreciated book value.

$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Account Balances at Beginning of Year }$$\begin{array}{lccc} & \text { State } M & \text { State }O& \text { Totals } \\ \text { Inventories } & \$ 200,000 & \$ 300,000 & \$ 500,000 \\\text { Building \& machinery (cost) } & 700,000 & 300,000 & 1,000,000 \\ \text { Accumulated depreciation } & (150,000) & (50,000) & (200,000) \\ \text { Land } & 400,000 & 200,000 & 600,000 \\& 1.150,000 & \$ 750.000 & \$ 1.900 .000 \\\end{array}$
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Account Balances at Year-End }$
$\begin{array}{lrrr}&\text {StateM}&\text {State O }&\text {Total}\\\text { Inventories } & \$ 400,000 & \$ 100,000 & \$ 500,000 \\\text { Building \& machinery (cost) } & 800,000 & 500,000 & 1,300,000 \\\text { Accumulated depreciation } & (300,000) & (100,000) & (400,000) \\\text { Land } & \underline{400,000} & \underline{200,000} &\underline{600,000}\\\text { Totals } & \$ 1,300,000 & \$ 700,000 & \$ 2,000,000 \\\\\text { Annual rent payments}&\$ 50,000 & \$ 25,000 \\\end{array}$
Bert's State M property factor is:

A) 75.0%.
B) 66.7%.
C) 64.9%.
D) 64.5%.