José Corporation realized $900,000 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 doubleweighted sales factor in its threefactor apportionment formula. How much of José's taxable income is apportioned to Z?

Question

José Corporation realized $900,000 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 double­weighted sales factor in its three­factor apportionment formula. How much of José's taxable income is apportioned to Z?

Quizplus · Accepted Answer

To apportion the taxable income to State Z, we need to use the apportionment formula. As given, State Z uses a double-weighted sales factor in its three-factor apportionment formula. Therefore, first, we need to calculate the sales factor using double weighting.

Sales factor = (Sales in Z x 2) / (Sales in X + Sales in Z) 
= (500,000 x 2) / (400,000 + 500,000) 
= 1.25

Now, using the three-factor formula, we can calculate the apportioned income to Z.

Apportioned income to Z = ($900,000 x 1.25) / 2 
= $562,500

Therefore, the answer is C, $180,000.

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