Cambridge, Inc. conducts business in states X and Y. This year, its before-tax income was $150,000. Below is information regarding its sales, payroll, and property factors in both states. $\begin{array}{rrrr}&X&Y&\text { TotaL }\
\text { Gross receipts/sales }&\$ 325,000 & \$ 75,000 & \$ 400,000 \
\text { Payroll }&90,000 & 10,000 & 100,000 \
\text { Property }&200,000 & 50,000 & 250,000
\end{array}$ Both states apply an equally-weighted three-factor formula to apportion income. State X has a 10% corporate income tax and state Y has a 5% corporate income tax. Compute the state tax savings if Cambridge could relocate $100,000 of property and $50,000 of payroll from state X to state Y.

Question

Cambridge, Inc. conducts business in states X and Y. This year, its before-tax income was $150,000. Below is information regarding its sales, payroll, and property factors in both states. $\begin{array}{rrrr}&X&Y&\text { TotaL }\
\text { Gross receipts/sales }&\$ 325,000 & \$ 75,000 & \$  400,000 \
\text { Payroll }&90,000 & 10,000 &  100,000 \
\text { Property }&200,000 & 50,000 &  250,000
\end{array}$ Both states apply an equally-weighted three-factor formula to apportion income. State X has a 10% corporate income tax and state Y has a 5% corporate income tax. Compute the state tax savings if Cambridge could relocate $100,000 of property and $50,000 of payroll from state X to state Y.

Quizplus · Accepted Answer

The Answer of Cambridge, Inc. conducts business in states X and Y. This year, its before-tax income was $150,000. Below is information regarding its sales, payroll, and property factors in both states. $\begin{array}{rrrr}&X&Y&\text { TotaL }\
\text { Gross receipts/sales }&\$ 325,000 & \$ 75,000 & \$  400,000 \
\text { Payroll }&90,000 & 10,000 &  100,000 \
\text { Property }&200,000 & 50,000 &  250,000
\end{array}$ Both states apply an equally-weighted three-factor formula to apportion income. State X has a 10% corporate income tax and state Y has a 5% corporate income tax. Compute the state tax savings if Cambridge could relocate $100,000 of property and $50,000 of payroll from state X to state Y.

Cambridge, Inc Both States Apply an Equally-Weighted Three-Factor Formula to Apportion Income