Boot Corporation is subject to income tax in States A andB Boot's operations generated $200,000 of apportionable income,and its sales and payroll activity and average property owned in each of the states is as follows. $\begin{array}{llll}
&\textbf{State A} &\textbf{State B}&\textbf{Totals}\
\text { Sales } & \$ 200,000 & \$ 600,000 & \$ 800,000 \
\text { Payroll } & 100,000 & 50,000 & 150,000 \
\text { Property } & 200,000 & 50,000 & 250,000
\end{array}$ How much more (less)of Boot's income is subject to A income tax if,instead of using an equally-weighted three-factor apportionment formula,A uses a formula with a double-weighted sales factor?

Question

Quizplus · Accepted Answer

Using an equally-weighted three-factor apportionment formula:

State A: (1/3)*(200,000) = $66,667
State B: (2/3)*(200,000) = $133,333

Using a formula with a double-weighted sales factor:

State A: (100,000/300,000)*(200,000) = $66,667
State B: (200,000/300,000)*(200,000) = $133,333

The apportionment of income between State A and State B remains the same regardless of the formula used. Therefore, there is no difference in the amount of income subject to State A income tax. The correct answer is (D)($16,100), which is not applicable in this scenario.

Boot Corporation Is Subject to Income Tax in States a AndB