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: Arkansas
Oklahoma
Kansas
Total
Gross receipts/sales
$175,000
$225,000
$100,000
$500,000
Payroll
20,000
140,000
20,000
180,000
Property
50,000
600,000
50,000
700,000
Tri-State's income for the current year is $250,000. Approximately how much will be taxed by Kansas?

Question

Quizplus · Accepted Answer

To determine how much income will be taxed by Kansas, we need to apply the UDITPA formula. Kansas has a sales factor of 0.2 (100,000/500,000), a payroll factor of 0.1111 (20,000/180,000), and a property factor of 0.0714 (50,000/700,000). The weighted sales factor is 0.2 x 250,000 = 50,000, the weighted payroll factor is 0.1111 x 250,000 = 27,775, and the weighted property factor is 0.0714 x 250,000 = 17,857. The sum of these three factors is 95,632. Therefore, Kansas will tax approximately 32% of Tri-State's income, which is $250,000 x 0.32 = $80,000. Rounded to the nearest thousand, the answer is C) $32,000.