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: $$\begin{array} { l r r r }
& \text { State } X & \text { State } Z & \text { T otals } \
\text { Sales } & \$ 1,500,000 & \$ 1,000,000 & \$ 2,500,000 \
\text { Property } & 500,000 & - 0 - & 500,000 \
\text { Payroll } & 2,000,000 & - 0 - & 2,000,000
\end{array}$$ X utilizes an equally weighted three-factor apportionment formula. How much of José's taxable income is apportioned to X?

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: $$\begin{array} { l r r r } 
& \text { State } X & \text { State } Z & \text { T otals } \
\text { Sales } & \$ 1,500,000 & \$ 1,000,000 & \$ 2,500,000 \
\text { Property } & 500,000 & - 0 - & 500,000 \
\text { Payroll } & 2,000,000 & - 0 - & 2,000,000
\end{array}$$ X utilizes an equally weighted three-factor apportionment formula. How much of José's taxable income is apportioned to X?

Quizplus · Accepted Answer

To calculate the income apportioned to State X, we use the equally weighted three-factor apportionment formula, which considers sales, property, and payroll. For each factor, we calculate the ratio of State X's amount to the total amount, then average these ratios.- Sales: $1,500,000 / $2,500,000 = 0.6- Property: $500,000 / $500,000 = 1- Payroll: $2,000,000 / $2,000,000 = 1Average = (0.6 + 1 + 1) / 3 = 2.6 / 3 = 0.8667Apportioned income to X = 0.8667 * $900,000 = $780,003, rounded to $780,000.

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