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apportionment_allocation_solutions

apportionment_allocation_solutions - TAX 5015 Topic...

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TAX 5015 Topic: Allocation & Apportionment – Solution Part 1: Allocation vs. apportionment . Nonbusiness income – allocable to State A \$100,000 Business income – States A and B 800,000 Total income \$900,000 State A’s apportionment factor is 40%; while State B’s apportionment factor is 62%. Both States A & B apportion only business income. Required : Compute each state’s taxable income. Taxable income: State A State B Apportionable income (\$800,000 x 40%) \$320,000 (\$800,000 x 62%) \$496,000 Allocable income 100,000 -0- Total state taxable income \$420,000 \$496,000 Part 2: Apportionment Americo, Inc. operates in three states with the following apportionment systems: State M's factors: average of four factors, sales double-weighted State L's factors: average of three factors, equally weighted State C's factors: sales factor only State: M L C Total Sales 400,000 100,000 500,000 1,000,000 Payroll 90,000 150,000 60,000 300,000 Property 120,000 240,000 40,000 400,000 Americo’s taxable income for year (all states) = \$100,000 Required : Compute the amount of income taxable to each state. State: M L C Sales 40% 10% 50% Sales 40%

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