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. Z utilizes a double-weighted sales factor in its three-factor apportionment formula.How much of José's taxable income is apportioned to Z?

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.  Z utilizes a double-weighted sales factor in its three-factor apportionment formula.How much of José's taxable income is apportioned to Z?

Quizplus · Accepted Answer

To determine how much of José's taxable income is apportioned to Z using the double-weighted sales factor, we need to calculate the sales factor for each state and multiply it by the taxable income.

For State X: 
Sales = $400,000 
Property = $100,000 
Payroll = $50,000

Sales factor= $400,000 ÷ $400,000 + $100,000 + $50,000 = 0.8

For State Z: 
Sales = $200,000 
Property = $0 
Payroll = $0

Sales factor= ($200,000 x 2) ÷ ($200,000 x 2) + $0 + $0 = 1.0

Total sales factor = 0.8 + 1.0 = 1.8

Income apportioned to Z = $600,000 x (1.0 ÷ 1.8) = $333,333 
Therefore, the correct option is B) $120,000.

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