Sharon Inc. is headquartered in State X and owns 100 percent of Carol, Josey, an

Question

Sharon Inc. is headquartered in State X and owns 100 percent of Carol, Josey, and Janice Corps, 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:

Compute the following for State X assuming a tax rate of 15 percent. (Be sure to use an equally weighted three-factor apportionment formula. Round your apportionment factors to 4 decimal places. Also round your apportioned business income and tax liability to the nearest dollar amount.)

a.

       

b.

       

c.

       

d.

      

Sharon Inc. is headquartered in State X and owns 100 percent of Carol, Josey, and Janice Corps, 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:

Explanation / Answer

Answer:a)

Working note:

Apportionment factor is calculated as:

Sharon: 2.12/3 = 0.7065

Carol: .65/3 = .2162

Janice: .55/3 = .1843

Answer:b)

Apportioned income = Apportionment factor * Income

Answer: c)

State taxable income = Apportioned income + allocated income

Answer:d)

Tax liability for entire group of state X is as follows:

Sharon Carol Josey Janice Sales X 81700 16400 11400 13200 Total 126400 94600 53700 47100 Property X 55000 21500 0 10400 Total 116250 109500 36250 38150 Payroll X 12900 17600 0 0 Total 12900 63100 3650 31400 Sales 0.65 0.17 0.28 Property 0.47 0.20 0.27 Payroll 1 0.28 0 Total 2.12 0.65 0.55 Apportionment factor 0.7065 0.2162 0.1843

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