Tri-State's, Inc. operates in Arkansas, Oklahoma, and Kansas. Assume that each state has adopted the UDITPA formula. During the corporation's tax year ended December 31, the apportionment data indicated: $\begin{array}{lrrrrr}&\text { Arkansas }&\text { Okahoma }&\text { Kansas }&\text { total }\
\text { Gross receipts/sales }&\$ 175,000 & \$ 225,000 & \$ 100,000 & \$ 500,000 \
\text { Payroll }&20,000 & 140,000 & 20,000 & 180,000 \
\text { Property }&50,000 & 600,000 & 50,000 & 700,000
\end{array}$ Tri-State's income for the current year is $250,000. Approximately how much will be taxed by Kansas?

Question

Quizplus · Accepted Answer

The Uniform Division of Income for Tax Purposes Act (UDITPA) uses a three-factor formula to apportion income among states. The formula averages the ratios of a company's property, payroll, and sales in each state to its total property, payroll, and sales. For Kansas:- Sales: $100,000 / $500,000 = 20%- Payroll: $20,000 / $180,000 = 11.11%- Property: $50,000 / $700,000 = 7.14%Average = (20% + 11.11% + 7.14%) / 3 = 38.25% / 3 = 12.75%Kansas Taxable Income = 12.75% of $250,000 = $31,875, which rounds to approximately $32,000.

Tri-State's, Inc Tri-State's Income for the Current Year Is $250,000