Cambridge,Inc.conducts business in states X and Y.This year,its before-tax income was $150,000.Below is information regarding its sales,payroll,and property factors in both states. Both states apply an equally-weighted three-factor formula to apportion income.State X has a 10% corporate income tax and state Y has a 5% corporate income tax.Compute the state tax savings if Cambridge could relocate $100,000 of property and $50,000 of payroll from state X to state Y.

Question

Cambridge,Inc.conducts business in states X and Y.This year,its before-tax income was $150,000.Below is information regarding its sales,payroll,and property factors in both states.  Both states apply an equally-weighted three-factor formula to apportion income.State X has a 10% corporate income tax and state Y has a 5% corporate income tax.Compute the state tax savings if Cambridge could relocate $100,000 of property and $50,000 of payroll from state X to state Y.

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The Answer of Cambridge,Inc.conducts business in states X and Y.This year,its before-tax income was $150,000.Below is information regarding its sales,payroll,and property factors in both states.  Both states apply an equally-weighted three-factor formula to apportion income.State X has a 10% corporate income tax and state Y has a 5% corporate income tax.Compute the state tax savings if Cambridge could relocate $100,000 of property and $50,000 of payroll from state X to state Y.