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: Tri-State's income for the current year is $250,000. Approximately how much income will be taxed by Oklahoma?

Question

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:  Tri-State's income for the current year is $250,000. Approximately how much income will be taxed by Oklahoma?

Quizplus · Accepted Answer

To determine the income to be taxed by Oklahoma, we need to use the UDITPA formula for Oklahoma, which is: 
(Oklahoma property factor + Oklahoma payroll factor + (2 x Oklahoma sales factor)) / 4

Plugging in the given numbers: 
(500,000 + 200,000 + (2 x 100,000)) / 4 = 225,000

Therefore, Oklahoma will tax 225,000 / 250,000 x $250,000 = $173,750 of Tri-State's income. 
The correct answer is D.