Boot Corporation is subject to income tax in States A and B. 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. $$\begin{array} { l r r r }
& \text { State A } & \text { State B } & \text { Totals } \
\text { Sales } & \$ 200,000 & \$ 600,000 & \$ 800,000 \
\text { Payroll } & 100,000 & 50,000 & 150,000 \
\text { Property } & 200,000 & 50,000 & 250,000
\end{array}$$ ? 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

Boot Corporation is subject to income tax in States A and B. 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. $$\begin{array} { l r r r } 
& \text { State A } & \text { State B } & \text { Totals } \
\text { Sales } & \$ 200,000 & \$ 600,000 & \$ 800,000 \
\text { Payroll } & 100,000 & 50,000 & 150,000 \
\text { Property } & 200,000 & 50,000 & 250,000
\end{array}$$ ? 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?

Quizplus · Accepted Answer

Using a double-weighted sales factor, State A's apportionment percentage changes, resulting in $16,100 less income subject to A's income tax compared to the equally-weighted formula.

Boot Corporation Is Subject to Income Tax in States a and B