Bert Corporation, a calendar-year taxpayer, owns property in States M and O.Both M and O require that the average value of assets be included in the property factor.M requires that the property be valued at its historical cost, and O requires that the property be included in the property factor at its net depreciated book value. Bert's M property factor is:

Question

Bert Corporation, a calendar-year taxpayer, owns property in States M and O.Both M and O require that the average value of assets be included in the property factor.M requires that the property be valued at its historical cost, and O requires that the property be included in the property factor at its net depreciated book value.   Bert's M property factor is:

Quizplus · Accepted Answer

Since State M requires historical cost, the property factor for State M will be based on the historical cost of the assets. We are not given any information about depreciation, so we assume that the assets are not depreciated. Therefore, the property factor for State M will be based on the historical cost of the assets.

To calculate the property factor, we need to divide the value of the assets located in State M by the value of all of the assets:

Value of assets in State M / Value of all assets

$500,000 / $770,000 = 0.649 (rounded to three decimal places)

Therefore, the property factor for State M is 64.9%.

Bert Corporation, a Calendar-Year Taxpayer, Owns Property in States M