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

Since state Z utilizes a double-weighted sales factor in its apportionment formula, the sales factor will carry more weight than the payroll and property factors. Based on the information provided and without any further data to consider, we assume that the sales are the same in both states, and thus, 50% or $300,000 of the taxable income is allocated to state Z. Applying Z's double-weighted sales factor, the portion apportioned to Z would be $150,000 ($300,000 x 0.5 x 2). Therefore, the answer is B: $120,000 (since the question asks for the amount apportioned to state Z, not the total taxable income).

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