General Corporation is taxable in a number of states. This year, General made a $100,000 sale from its A headquarters to an agency of the U.S. government. State A applies a throwback rule. In which state(s) will the sale be included in the sales factor numerator?

Question

Quizplus · Accepted Answer

State A applies a throwback rule, which means that sales made to customers in states where the corporation is not subject to tax are included in the numerator of the sales factor for the state where the corporation is taxable (State A). Since the sale was made from Headquarters in State A, the entire $100,000 must be included in the sales factor numerator for State A. The Colgate doctrine only applies to exempting sales from the sales factor denominator, not the numerator, so option B is incorrect. Option D is also incorrect, as the presence of the U.S. government in other states does not necessarily mean that those states have jurisdiction to tax General Corporation.

General Corporation Is Taxable in a Number of States