Guilford Corporation Is Subject to Franchise Tax in State Z

Guilford Corporation is subject to franchise tax in State Z. The tax is imposed at a rate of 2.5% of the taxpayer's net worth that is apportioned to the state by use of a two factor (sales and property equally weighted) formula. The property factor includes real and tangible personal property, valued at net book value at the end of the taxable year. Sixty percent of Guilford's sales are attributable to Z, and $200,000 of the net book value of Guilford's tangible personal property is located in Z.
Determine the Z franchise tax payable by Guilford this year, given the following end-of-the year balance sheet. $\begin{array}{lr}\text { Cash} &&\$100,000 \\\text { Equipment} & \$ 800,000 \\\text { Accumulated depreciation}& \underline{(200,000) }&600,000\\\text { Furniture and fixtures} &\$ 150,000 \\\text { Accumulated depreciation} & (50,000) &100,000\\\text {Intangible assets}&&200,000\\\text {Total assets}&&\$1,000,000\\\\\text { Accounts and taxes payable } && \$ 150,000 \\\text { Long-term debt } && 300,000 \\\text { Common stock } && 10,000 \\\text { Additional paid-in capital } && 600,000 \\\text { Retained earnings } && \underline{(60,000) } \\\text { Total liabilities and equity } && \underline{\$ 1,000,000}\end{array}$

A) $0, due to the negative retained earnings
B) $6,050
C) $8,250
D) $13,750