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 three-factor apportionment formula, it places a higher emphasis on sales than the other factors (payroll and property). Therefore, a larger percentage of José's taxable income would be apportioned to State Z based on its sales in that state. Without knowing the specific percentage of sales in State Z versus State X, we can assume that $600,000 taxable income would be apportioned based on each state's sales factor. Given that the formula in State Z is double-weighted, this would mean that $200,000 of José's taxable income would be apportioned to State Z based on its sales factor. Therefore, the correct answer is C) $120,000, which represents 60% of the $200,000 apportioned based on sales in State Z.

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