José Corporation realized $600,000 taxable income from the sales of its products in States X and Z. José's activities in both states establish nexus for income tax purposes. José's sales, payroll, and property among the states include the following. X utilizes an equally weighted three-factor apportionment formula. How much of José's taxable income is apportioned to X?

Question

José Corporation realized $600,000 taxable income from the sales of its products in States X and Z. José's activities in both states establish nexus for income tax purposes. José's sales, payroll, and property among the states include the following.  X utilizes an equally weighted three-factor apportionment formula. How much of José's taxable income is apportioned to X?

Quizplus · Accepted Answer

To calculate the apportionment to State X, we first need to calculate the sales, payroll, and property factors for both states.

For State X: 
Sales factor = ($300,000 + $600,000)/($300,000 + $600,000 + $400,000) = 0.6 
Payroll factor = ($100,000 + $200,000)/($100,000 + $200,000 + $150,000) = 0.6154 
Property factor = ($100,000 + $200,000)/($100,000 + $200,000 + $150,000) = 0.6154

Weighted factor = (0.6 + 0.6154 + 0.6154)/3 = 0.6136

Apportioned income to State X = $600,000 x 0.6136 = $368,160

Therefore, the correct answer is B) $520,200 ($600,000 - $368,160).

José Corporation Realized $600,000 Taxable Income from the Sales of Its