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. (Use an equally weighted three-factor apportionment. Do not round intermediate calculations. Round apportionment factors to 4 decimal places. Round other answers to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.)

b. Calculate the business income apportioned to State X.

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

Domicile State Sharon Inc.
State X
(throwback) Carol Corp
State Y
(throwback) Josey Corp
State Z
(nonthrowback) Janice Corp
State Z
(nonthrowback) Dividend income $ 1,790 $ 535 $ 635 $ 925 Business income $ 43,700 $ 38,250 $ 15,200 $ 10,900 Sales: State X $ 98,200 $ 14,400 $ 10,600 $ 15,200 State Y $ 54,250 $ 9,100 State Z $ 22,900 $ 25,750 $ 13,300 State A $ 25,300 State B $ 18,900 $ 19,600 Property: State X $ 60,250 $ 27,300 $ 16,400 State Y $ 82,000 State Z $ 49,750 $ 29,500 State A $ 67,750 Payroll: State X $ 10,800 $ 19,900 State Y $ 57,750 State Z $ 4,250 $ 11,900 State A $ 19,000

Explanation / Answer

Computation of State X tax liability, Business Income and taxable income Josey has no nexus in State X as it has no property or payroll in State X Sharon Inc. Carol Corp Josey Corp Janice Corp Sales X $98,200 $14,400 $10,600 $15,200 Total $142,400 $91,550 $45,450 $48,100 Property X $60,250 $27,300 0 $16,400 Total $128,000 $109,300 $49,750 $45,900 Payroll X $10,800 $19,900 0 $0 Total $10,800 $77,650 $4,250 $30,900 Sales 0.69 0.16 0.32 Property 0.47 0.25 0.36 Payroll 1 0.26 0 2.16 0.66 0.67 Approtionment Factor 0.7201 0.2211 0.2244 Income $43,700 $38,250 $10,900 Apportioned Income $31,469 $8,458 $2,446 $42,372 Allocated Income $1,790 State Taxable Income $33,259 $8,458 $2,446 Total Taxable Income $44,162 Tax rate 15% State Tax Liability $6,624 Business Income apportioned to State X is $42,372

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