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. X utilizes an equally weighted three-factor apportionment formula.How much of José's taxable income is apportioned to X?

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.  X utilizes an equally weighted three-factor apportionment formula.How much of José's taxable income is apportioned to X?

Quizplus · Accepted Answer

To determine the apportioned taxable income allocated to X, we need to use the equally-weighted three-factor formula, which takes into account three factors: sales, payroll, and property. Since we don't have any information on José's property or payroll allocation, we'll only consider the sales factor.
The formula is: 
( Sales in State X ÷ Total Sales ) x Taxable Income = Apportioned Taxable Income for State X
From the table, we see that José had $300,000 in sales in State X and $600,000 in total sales. Thus, the sales factor is 0.5 (50%). Plugging this into the formula, we get:
( $300,000 ÷ $600,000 ) x $600,000 = $300,000/2 = $150,000
Therefore, $150,000 of José Corporation's taxable income should be apportioned to State X. However, this does not take into account the tax rate in State X, which may affect the final amount of tax owed.

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