José Corporation realized $900,000 taxable income from the sales of its products in States X and Z. José's activities in both states establish nexus for income tax purposes. José's sales, payroll, and property among the states include the following. $\begin{array}{lrrr}
& \text { StateX } & \text { StateZ } & \text { Totals } \
\text { Sales } & \$ 1,500,000 & \$ 1,000,000 & \$ 2,500,000 \
\text { Property } & 500,000 & -0- & 500,000 \
\text { Payroll } & 2,000,000 & -0- & 2,000,000
\end{array}$ ? Z utilizes a double-weighted sales factor in its three-factor apportionment formula. How much of José's taxable income is apportioned to Z?

Question

José Corporation realized $900,000 taxable income from the sales of its products in States X and Z. José's activities in both states establish nexus for income tax purposes. José's sales, payroll, and property among the states include the following. $\begin{array}{lrrr} 
& \text { StateX } & \text { StateZ } & \text { Totals } \
\text { Sales } & \$ 1,500,000 & \$ 1,000,000 & \$ 2,500,000 \
\text { Property } & 500,000 & -0- & 500,000 \
\text { Payroll } & 2,000,000 & -0- & 2,000,000
\end{array}$ ? Z utilizes a double-weighted sales factor in its three-factor apportionment formula. How much of José's taxable income is apportioned to Z?

Quizplus · Accepted Answer

The apportionment formula for State Z is: $(\text{Sales Factor} \times 2 + \text{Property Factor} + \text{Payroll Factor}) / 4$. The sales factor for Z is $1,000,000/2,500,000 = 0.4$. The property and payroll factors are 0 since there is no property or payroll in Z. Thus, the apportionment percentage is $(0.4 \times 2 + 0 + 0) / 4 = 0.2$. Therefore, $900,000 \times 0.2 = $180,000 is apportioned to Z.

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