Question

Roger Corporation operates in two states, as indicated below. This year’s operations generated $400,000 of apportionable income.

State A State B Total Sales $ 800,000 $ 200,000 $ Property $ 300,000 $ 300,000 $ Payroll $ 200,000 $ 50,000 $ 1,000,000 600,000 250,000

Compare Roger’s State A taxable income assuming that state A apportions income based on a:

1. Three-factor formula, equally weighted
2. Three-factor formula, with double -weighted sales factor.
3. Sales factor only.

Answer 1

Solution

Requirement A:Three-factor formula, equally weighted

No.	Particulars
a	Sales (800000/1000000)	80%
b	Property(300000/600000)	50%
c	Payroll (200000/250000)	80%
d	Sum of Factors(a+b+c)	210%
e	Equal Weights(1:1:1)	3
f	Apportionable Factor for State A (d/e)	70%
g	Operation Taxable Income(Given)	$        400,000
h	Taxable Income Allocated for State A( g * f)	$        280,000

Requirement B:Three-factor formula, with double -weighted sales factor.

No.	Particulars
a	Sales (800000/1000000)*2	160%
b	Property(300000/600000)	50%
c	Payroll (200000/250000)	80%
d	Sum of Factors(a+b+c)	290%
e	Double Weights to sales factor (2:1:1)	4
f	Apportionable Factor for State A (d/e)	72.50%
g	Operation Taxable Income(Given)	$        400,000
h	Taxable Income Allocated for State A( g * f)	$        290,000

Requirement C:Sales factor only.

No.	Particulars
a	Sales (800000/1000000)	80%
f	Apportionable Factor for State A	80%
g	Operation Taxable Income(Given)	$        400,000
h	Taxable Income Allocated for State A( g * f)	$        320,000