Question 1

General Corporation is taxable in a number of states.This year,General made a $100,000 sale from its A headquarters to the State B office of the FBI.In which state(s) will the sale be included in the sales factor numerator?

Accepted Answer

The sale will be included in the sales factor numerator in State A because the sale was made from the headquarters in State A to the FBI office in State B. The Colgate doctrine does not apply to sales between a corporation's headquarters and its other offices.

Question 2

José Corporation realized $900,000 taxable income from the sales of its products in States X and Z.José's activities in both states establish nexus for income tax purposes.José's sales,payroll,and property among the states include the following.
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X utilizes an equally weighted three-factor apportionment formula.How much of José's taxable income is apportioned to X?

Accepted Answer

The answer of José Corporation realized $900,000 taxable income from...

Question 3

General Corporation is taxable in a number of states.This year,General made a $100,000 sale from its A headquarters to a customer in B.This activity is not sufficient for General to create nexus with B.State A applies a throwback rule,but State B does not.In which state(s) will the sale be included in the sales factor numerator?

Accepted Answer

State A applies a throwback rule, which means that sales are "thrown back" to the state of origin if the destination state (B in this case) does not have nexus with the taxpayer. Therefore, the $100,000 sale will be included in the sales factor numerator for State A. State B does not have a throwback rule and does not have nexus with General, so the sale will not be included in the sales factor numerator for State B.

Question 4

​Generally,a taxpayer's business income is:

Accepted Answer

The answer of ​Generally,a taxpayer's business income is:
...

Question 5

Britta Corporation's entire operations are located in State A.Eighty percent ($800,000) of Britta's sales are made in A and the remaining sales ($200,000) are made in State B.B has not adopted a corporate income tax.If A has adopted a throwback rule,the numerator of Britta's A sales factor is:

Accepted Answer

Since State B has not adopted a corporate income tax, the throwback rule applies, and all sales made in State B are "thrown back" to State A. Therefore, the numerator of Britta's A sales factor includes all sales, totaling $1,000,000.

Question 6

​In the income tax apportionment formula,market-sourcing the sales factor means that:
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Accepted Answer

Market-sourcing means that sales are sourced to the state of the customer. This method of sourcing sales is used by many states for determining corporate income tax apportionment. It is meant to reflect the market in which the product or service is consumed, rather than where the seller is located or where the product is produced. This approach is intended to better align tax liability with economic activity.

Question 7

Boot Corporation is subject to income tax in States A and B.Boot's operations generated $200,000 of apportionable income,and its sales and payroll activity and average property owned in each of the states is as follows.
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How much more (less) of Boot's income is subject to A income tax if,instead of using an equally-weighted three-factor apportionment formula,A uses a formula with a double-weighted sales factor?

Accepted Answer

The answer of Boot Corporation is subject to income tax...

Question 8

Chipper Corporation realized $1,000,000 taxable income from the sales of its products in States X and Z.Chipper's activities establish nexus for income tax purposes only in Z,the state of its incorporation.Chipper's sales,payroll,and property among the states include the following.
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X utilizes a sales-only factor in its three-factor apportionment formula.How much of Chipper's taxable income is apportioned to X?

Accepted Answer

Chipper Corporation only has nexus in State Z, and State X only uses a sales-only factor in its apportionment formula, meaning that only sales made in State X would be included in the apportionment calculation. Since there were no sales made in State X, none of Chipper's taxable income would be apportioned to State X, resulting in an apportionment of $0.

Question 9

​Generally,nonapportionable income includes:

Accepted Answer

The answer of ​Generally,nonapportionable income includes:
...

Question 10

General Corporation is taxable in a number of states.This year,General made a $100,000 sale from its A headquarters to a customer in B.This activity is not sufficient for General to create nexus with B.State B applies a throwback rule,but State A does not.In which state(s) will the sale be included in the sales factor numerator?

Accepted Answer

Since State B does not have nexus with General, the sale will not be included in the sales factor numerator of State B. Additionally, since State A does not have a throwback rule, the sale will also not be included in the sales factor numerator of State A. Therefore, the correct answer is A.

Question 11

Cruz Corporation owns manufacturing facilities in States A,B,and C.A uses a three-factor apportionment formula under which the sales,property and payroll factors are equally weighted.B uses a three-factor apportionment formula under which sales are double-weighted.C employs a single-factor apportionment factor,based solely on sales.
Cruz's operations generated $1,000,000 of apportionable income,and its sales and payroll activity and average property owned in each of the three states is as follows.
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Cruz's apportionable income assigned to C is:

Accepted Answer

The answer of Cruz Corporation owns manufacturing facilities in States...

Question 12

Helene Corporation owns manufacturing facilities in States A,B,and C.A uses a three-factor apportionment formula under which the sales,property and payroll factors are equally weighted.B uses a three-factor apportionment formula under which sales are double-weighted.C employs a single-factor apportionment factor,based solely on sales.
Helene's operations generated $1,000,000 of apportionable income,and its sales and payroll activity and average property owned in each of the three states is as follows.
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Helene's apportionable income assigned to A is:

Accepted Answer

For state A: 
Sales Factor = $800,000 / $2,000,000 = 0.4 
Payroll Factor = $200,000 / $600,000 = 0.3333 
Property Factor = $500,000 / $1,500,000 = 0.3333 
Apportionment Factor = (0.4 + 0.3333 + 0.3333) / 3 = 0.3556 
Apportioned Income to A = 0.3556 x $1,000,000 = $355,600

For state B: 
Sales Factor = $800,000 x 2 / $2,000,000 = 0.8 
Payroll Factor = $200,000 / $600,000 = 0.3333 
Property Factor = $500,000 / $1,500,000 = 0.3333 
Apportionment Factor = (0.8 + 0.3333 + 0.3333) / 3 = 0.4889 
Apportioned Income to B = 0.4889 x $1,000,000 = $488,900

For State C:
Sales Factor = $200,000 / $2,000,000 = 0.1 
Apportioned Income to C = 0.1 x $1,000,000 = $100,000

Therefore, total apportioned income to all three states is $355,600 + $488,900 + $100,000 = $944,500. 
Since none of the options provided match this value, the best answer is the closest option, which is C), $311,100.

Question 13

Marquardt Corporation realized $900,000 taxable income from the sales of its products in States X and Z.Marquardt's activities establish nexus for income tax purposes in both states.Marquardt's sales,payroll,and property among the states include the following.
Z utilizes an equally weighted three-factor apportionment formula.Marquardt is incorporated in X.How much of Marquardt's taxable income is apportioned to Z?

Accepted Answer

The answer of Marquardt Corporation realized $900,000 taxable income from...

Question 14

General Corporation is taxable in a number of states.This year,General made a $100,000 sale from its A headquarters to a customer in B.General has not established nexus with B.State A does not apply a throwback rule.In which state(s) will the sale be included in the sales factor numerator?

Accepted Answer

The answer of General Corporation is taxable in a number...

Question 15

​Typically,state taxable income includes:

Accepted Answer

State taxable income includes both apportionable and nonapportionable income. Apportionable income is allocated to a specific state based on the portion of business activity conducted in that state, while nonapportionable income is taxed by the state in which it was earned. Different terms may be used in the computation, but both types of income are included in the calculation of state taxable income.

Question 16

​Public Law 86-272:
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Accepted Answer

Public Law 86-272 was adopted by Congress in 1959 and provides a safe harbor for certain out-of-state businesses that engage in specific limited activities within a state, protecting them from having to pay taxes or comply with state tax laws beyond those limited activities.

Question 17

​In applying the typical apportionment formula:
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Accepted Answer

The apportionment formula does not necessarily require the aggregate of state taxable incomes to equal Federal taxable income. Depending on the specific circumstances, it is possible for them to differ.

Question 18

​The most commonly used state income tax apportionment formula is:
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Accepted Answer

The answer of ​The most commonly used state income tax...

Question 19

José Corporation realized $900,000 taxable income from the sales of its products in States X and Z.José's activities in both states establish nexus for income tax purposes.José's sales,payroll,and property among the states include the following.
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Z utilizes a double-weighted sales factor in its three-factor apportionment formula.How much of José's taxable income is apportioned to Z?

Accepted Answer

To calculate the apportioned income to Z, we need to multiply the total taxable income by the sales factor for that state. Since Z uses a double-weighted sales factor, we need to multiply the sales by 2.

Sales in Z = $500,000
Sales factor for Z = (sales in Z ÷ total sales) x 2 = ($500,000 ÷ $1,500,000) x 2 = 0.67

Apportioned income to Z = $900,000 x 0.67 = $603,000

However, since the apportioned income cannot exceed the total taxable income, the answer is the lesser value between $603,000 and $900,000, which is $180,000. Therefore, the correct answer is C, $180,000.

Question 20

Simpkin Corporation owns manufacturing facilities in States A,B,and C.A uses a three-factor apportionment formula under which the sales,property and payroll factors are equally weighted.B uses a three-factor apportionment formula under which sales are double-weighted.C employs a single-factor apportionment factor,based solely on sales.
Simpkin's operations generated $1,000,000 of apportionable income,and its sales and payroll activity and average property owned in each of the three states is as follows.
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Simpkin's apportionable income assigned to B is:

Accepted Answer

The answer of Simpkin Corporation owns manufacturing facilities in States...

Quiz 24: Multistate Corporate Taxation

General Corporation is taxable in a number of states.This year,General made a $100,000 sale from its A headquarters to the State B office of the FBI.In which state(s) will the sale be included in the sales factor numerator?

​Generally,a taxpayer's business income is:

Britta Corporation's entire operations are located in State A.Eighty percent ($800,000) of Britta's sales are made in A and the remaining sales ($200,000) are made in State B.B has not adopted a corporate income tax.If A has adopted a throwback rule,the numerator of Britta's A sales factor is:

​In the income tax apportionment formula,market-sourcing the sales factor means that: ​

​Generally,nonapportionable income includes:

General Corporation is taxable in a number of states.This year,General made a $100,000 sale from its A headquarters to a customer in B.General has not established nexus with B.State A does not apply a throwback rule.In which state(s) will the sale be included in the sales factor numerator?

​Typically,state taxable income includes:

​Public Law 86-272: ​

​In applying the typical apportionment formula: ​

​The most commonly used state income tax apportionment formula is: ​

Generally,a taxpayer's business income is:

In the income tax apportionment formula,market-sourcing the sales factor means that:

Generally,nonapportionable income includes:

Typically,state taxable income includes:

Public Law 86-272:

In applying the typical apportionment formula:

The most commonly used state income tax apportionment formula is: