Norman Corporation owns and operates two manufacturing facilities, one in State X and the other in State Y.Due to a temporary decline in the corporation's sales, Norman has rented 20% of its Y facility to an unaffiliated corporation.Norman generated $1,000,000 net rental income and $2,000,000 income from manufacturing. Norman is incorporated in Y. For X and Y purposes, rental income is classified as allocable nonbusiness income.By applying the statutes of each state, Norman determined that its apportionment factors are .65 for X and .35 for Y.
Norman's income attributed to X is:

Question

Quizplus · Accepted Answer

The rental income is considered allocable nonbusiness income and is attributed entirely to State Y. Therefore, only the manufacturing income is subject to apportionment. The manufacturing income of $2,000,000 is apportioned to State X using the apportionment factor of 0.65, resulting in $1,300,000 attributed to State X.

Norman Corporation Owns and Operates Two Manufacturing Facilities, One in State