mula to apportion
Chapter24: Multistate Corporate Taxation
Section: Chapter Questions
Problem 19CE
Related questions
Question
Oldham Incorporated conducts business in State M and State N, which both use the UDITPA three-factor formula to apportion income
State M's corporate tax rate is 4.5 percent, and State N's corporate tax rate is 7 percent. This year, Oldham had the following sales, payroll, and property (in thousands of dollars) in each state:
Gross receipts from sales
Payroll expense
Property costs
State M
3,000
800
900
State N
$ 7,500
1,200
1,000
Total
$ 10,500
2,000
1,900
Required:
Oldham's before-tax income was $3 million. Compute Oldham's State M and State N tax if State N uses an apportionment formula in which the sales factor is double-weighted.
(Round all apportionment factors to 4 decimal places, e.g., 47.15% would be 0.4715. Enter
"Apportionment percentage" and "Tax rate" in decimals and not in percentage. Do not round any intermediate values. Enter your
answers in dollars and not in millions or thousands of dollars.)
Transcribed Image Text:Oldham Incorporated conducts business in State M and State N, which both use the UDITPA three-factor formula to apportion income.
State M's corporate tax rate is 4.5 percent, and State N's corporate tax rate is 7 percent. This year, Oldham had the following sales,
payroll, and property (in thousands of dollars) in each state:
State M
State N
Total
$ 7,500
1,200
1,000
$ 10,500
2,000
1,900
$ 3,000
Gross receipts from sales
Payroll expense
Property costs
800
900
Required:
Oldham's before-tax income was $3 million. Compute Oldham's State M and State N tax if State N uses an apportionment formula in
which the sales factor is double-weighted. (Round all apportionment factors to 4 decimal places, e.g., 47.15% would be 0.4715. Enter
"Apportionment percentage" and "Tax rate" in decimals and not in percentage. Do not round any intermediate values. Enter your
answers in dollars and not in millions or thousands of dollars.)
X Answer is complete but not entirely correct.
State M
State N
Total taxable income subject to apportionment
2$
3,000,000 OS
3,000,000
0.3865 O
0.0000 X
Apportionment percentage
State taxable income
1,159,500
0.045 O
0.07 V
Tax rate
52,178
State tax
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