Question

Required information [The following information applies to the questions displayed below.] Sharon Inc. is headquartered in State X and owns 100 percent of Carol Cor., Josey Corp., and Janice Corp., which form a single unitary group. Assume sales operations are within the solicitation bounds of Public Law 86-272. Each of the corporations has operations in the following states: Josey Corp Sharon Inc. Carol Corp. Janice Corp. State X State Y State Z State Z Domicile State (throwback) (throwback) (nonthrowback) (nonthrowback) $ 1,000 $50,000 $70,000 Dividend income 200 300 500 $10,000 $10,000 5,000 $20,000 Business income $30,000 $10,000 $40,000 $20,000 $10,000 $10,000 Sales: State X State Y $10,000 State Z $20,000 $1.000 $10,000 $10,000 State B $50,000 $20,000 $80,000 Property: State X State Y $25,000 $20,000 State Z $50,000 $10,000 State A Payroll: $10,000 $40,000 State X State Y 3,000 $10,000 $10,000 State Z State A Compute the following for State X assuming a tax rate of 15 percent. (Use an equally weighted three-factor apportionment. Round all apportionment factors to 4 decimal places. Round other answers to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.)

a. Calculate the State X apportionment factor for Sharon Inc., Carol Corp., Josey Corp., and Janice Corp.

b. Calculate the business income apportioned to State X.

c. Calculate the taxable income for State X for each company.

d. Determine the tax liability for State X for the entire group.

Answer 1

a. apportionment factor (we will find out state X portion)

	Sharon Inc	Carol corp	josey corp	janice Corp
Sales state X	70000$	10000$	10000$	10000$
Total Sales	100000[70+10+20]	70000[10000+40000+20000]	35000[10000+5000+20000]	30000[10000+10000+10000]
Property state X	50000$	20000$	0	10000$
Total	100000$ [50000+50000]	100000$ [20000+80000]	25000	30000 [10000+20000]
Payroll state X	10000$	10000$	0	0
Total Payroll	10000$	50000 [10000+40000]	3000	20000
% of state X in total sales	0.7 [70000/100000]	0.1428 [10000/70000]	-	0.333 [10000/30000]
% of state X in total property	0.5 [50000/100000]	0.2 [20000/100000]	-	0.333 [10000/30000]
% of state X in total payroll	1 [10000/10000]	0.2 [10000/50000]	-	0
Total	2.2	0.54	-	0.66
Apportionment Factor Income	0.7333 [2.2/3]	0.18 [0.54/3]	-	0.22 [0.66/3]
Josey corp will not be considered in apportionment of income as it has no property or payroll there (no physical presence).

b. business income apportioned to State X.

	sharon	carol	Josey	Janice
Business Income	50000	30000	10000	10000
Apportionment factor	0.7333	0.18	-	0.222
Business Income apportioned to state x Answer B	36665 [50000*0.733]	5400 [30000*0.18]	-	2222 [10000*.2222]
Allocated income (dividend) received from carol, janice, josey	1000	0	0	0
Taxable Income Answer C	37665	5400	0	2222

d.

tax liability for state X for entire group (37665+5400+2222) *15% tax rate

=6793$