None
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter16: Multijurisdictional Taxation
Section: Chapter Questions
Problem 3CE
Related questions
Question
None
Transcribed Image Text:Cromwell Corporation does business in two states, A and B. State A uses an equal-weighted, three-factor apportionment formula and
has a 6 percent state tax rate. State B uses an apportionment formula that double-weights the sales factor and has a 5.5 percent state
tax rate. Cromwell's state-level taxable income, before apportionment, is $2.5 million. It has identified the following components of its
sales, payroll, and property factors:
Sales
Payroll
Average property
Required:
State A
$ 6,500,000
2,500,000
1,500,000
State B
$ 4,250,000
1,700,000
1,050,000
Total
$ 10,750,000
4,200,000
2,550,000
a. Calculate Cromwell's apportionment factors, income apportioned to each state, and state tax liability.
b. State B is considering changing its apportionment formula to place 100 percent of the weight on the sales factor, ignoring payroll
and property for apportionment purposes. Given its current levels of activity, what would Cromwell's state tax liability be for each
state?
Complete this question by entering your answers in the tabs below.
Required A Required B
Calculate Cromwell's apportionment factors, income apportioned to each state, and state tax liability.
Note: Round all apportionment factors to 2 decimal places, e.g., 0.4715 would be entered as 47.15% and final answer dollar
values to the nearest whole dollar. Consider your intermediate values in dollars and not in millions. Enter your answers also in
dollars and not in millions of dollars.
Annationment Instan
State A
State B
Show less▲
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Recommended textbooks for you