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 taxed by Kansas, we need to first calculate the sales factor. Total sales for Tri-State's are $700,000, with $100,000 in Kansas. Therefore, the sales factor for Kansas is 100,000/700,000 = 14.29%. The income apportioned to Kansas is then 250,000 x 14.29% = $35,725. However, Kansas has a three-factor formula, meaning that the income apportioned to Kansas is also adjusted based on the property and payroll factors. Based on the data given, Kansas has a property factor of 10% and a payroll factor of 15%. So, the total apportioned income to Kansas is:

(35,725 x (15% + 10%))/2 = $32,076

Therefore, the best choice is C.