Beckett Corporation realized $800,000 of taxable income from the sales of its pr

Question

Beckett Corporation realized $800,000 of taxable income from the sales of its products in States A and B. Beckett’s activities establish nexus for income tax purposes in both states. Beckett’s sales, payroll, and property in the states include the following:

State A State B Total

Sales $960,000 $640,000 $1,600,000

Property $180,000 $0 $180,000

Payroll $220,000 $0 $220,000

State B uses a double-weighted sales factor in its three-factor apportionment formula.

If required, round any division to two decimal places and round your final answer to the nearest dollar.

How much of Beckett's taxable income is apportioned to State B? $ ___________

Explanation / Answer

Apportionment factors:

Sales = $640,000/$1,600,000 = 40% = 40% * 2 = 80%

Property = $0

Payroll = $0

Apportionment factors for State B = 80%/4 = 20%

Taxable income apportioned to State B = $800,000 * 20% = $160,000

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