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Dott Corporation Generated $300,000 of State Taxable Income from Selling

Question 174

Essay

Dott Corporation generated $300,000 of state taxable income from selling its mapping software in States A and B.
For the taxable year, the corporation's activities within the two states were as follows:  State A  State B  Total  Sales $500,000$1,500,000$2,000,000 Property 250,0000250,000 Payroll 200,000300,000500,000\begin{array} { l r r r } & \text { State A } & \text { State B } & \text { Total } \\\text { Sales } & \$ 500,000 & \$ 1,500,000 & \$ 2,000,000 \\\text { Property } & 250,000 & - 0 - & 250,000 \\\text { Payroll } & 200,000 & 300,000 & 500,000\end{array} Dott has determined that it is subject to tax in both A and B. Both states utilize a three-factor apportionment formula that equally weights sales, property, and payroll. The rates of corporate income tax imposed in States A and B are
7% and 10%, respectively. Determine Dott's total state income tax liability.

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