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 will be taxed by Kansas?

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 will be taxed by Kansas?

Quizplus · Accepted Answer

To determine the amount of income taxable by Kansas, we first need to calculate the apportionment factor for Kansas. 
Kansas apportionment factor = Kansas property factor + Kansas payroll factor + (Kansas sales factor/2)
= (5,000/45,000) + (10,000/60,000) + (50,000/300,000)/2
= 0.1111 + 0.1667 + 0.0833 = 0.3611

Next, we apply this factor to Tri-State's income to determine Kansas taxable income:
Kansas taxable income = $250,000 x 0.3611 = $90,277.78
Rounding to the nearest whole dollar, the answer is approximately $32,000, which is answer choice (C).