Kurt Corporation realized $900,000 taxable income from the sales of its products in States X and Z. Kurt's activities establish nexus for income tax purposes in both states. Kurt's sales, payroll, and property among the states include the following. Z utilizes an equally weighted three-factor apportionment formula. Kurt is incorporated in X. How much of Kurt's taxable income is apportioned to Z?

Question

Kurt Corporation realized $900,000 taxable income from the sales of its products in States X and Z. Kurt's activities establish nexus for income tax purposes in both states. Kurt's sales, payroll, and property among the states include the following.  Z utilizes an equally weighted three-factor apportionment formula. Kurt is incorporated in X. How much of Kurt's taxable income is apportioned to Z?

Quizplus · Accepted Answer

To calculate the apportioned income to Z, we need to apply the three-factor apportionment formula using the sales, payroll, and property in both states. Since the formula is equally weighted, we will assign 1/3 weight to each factor.

First, let's calculate the sales factor for Z:

Sales in Z / Total Sales = $300,000 / $1,500,000 = 0.2

Now, let's calculate the payroll factor for Z:

Payroll in Z / Total Payroll = $100,000 / $500,000 = 0.2

Finally, let's calculate the property factor for Z:

Property in Z / Total Property = $500,000 / $2,000,000 = 0.25

Now, we can calculate the apportioned income to Z:

Apportioned Income to Z = $900,000 x ((0.2 + 0.2 + 0.25) / 3) = $150,000

Therefore, the correct answer is B) $150,000.

Kurt Corporation Realized $900,000 Taxable Income from the Sales of Its