M Corp.earns $100,000 of business income from the licensing of a patent to an unrelated party.M's commercial domicile is State A.The licensee utilizes the patent in State B.Under the MTC regulations, royalties received by M from the license should be included in the numerator of the sales factors as follows
A)State A-$100,000; State B-$0
B)State A-$0; State B-$100,000
C)State A-$100,000; State B-$100,000
D)State A-$50,000; State B-$50,000
E)State A-$; State B-$0

Question

Quizplus · Accepted Answer

Under the MTC regulations, royalties are sourced to the state where the patent is utilized, which in this case is State B.

M Corpearns $100,000 of Business Income from the Licensing of a a Patent