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 .75 for X and .25 for Y.
Norman's income attributed to X is:

Question

Quizplus · Accepted Answer

Norman's income attributed to X is calculated by apportioning the business income ($2,000,000) using the apportionment factor for X (0.75). The rental income is allocable nonbusiness income and is not subject to apportionment, so it is not included in the income attributed to X. Therefore, $2,000,000 * 0.75 = $1,500,000.

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