Dott Corporation generated $300,000 of state taxable income from selling its mapping software in States A and
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Question:
Dott Corporation generated $300,000 of state taxable income from selling its mapping software in States A and B. For the taxable year, the corporation’s activities within the two states were as follows.
State A | State B | Total | |
Sales | $500,000 | $1,500,000 | $2,000,000 |
Property | 250,000 | –0– | 250,000 |
Payroll | 200,000 | 300,000 | 500,000 |
Dott has determined that it is subject to tax in both A and B. Both states utilize a three-factor apportionment formula that equally weights sales, property, and payroll. The rates of corporate income tax imposed in States A and B are 7% and 10%, respectively. Determine Dott’s total state income tax liability.
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