: Multi-state apportionment & computation of tax
Dog Corporation, a retailer of paper products, owns retail stores in States A, B, and C.
State A uses a three-factor apportionment formula under which the sales, property and
payroll factors are equally weighted.
State B uses a three-factor apportionment formula
under which sales are double weighted.
State C employs a single-factor apportionment
formula, based solely on sales.
Dog’s operations generated $800,000 of apportionable income (Federal taxable income
+/- state adjustments), and its sales, payroll, and average property owned in each of the
three states are as follows:
500,000 400,000 300,000 1,200,000
150,000 250,000 100,000
Income tax rate
: Compute the income apportioned to each state and the state corporate
income tax liability.
What tax planning opportunities might you recommend?
some people and/or property to State C.
Total state corporate income taxes are
reduced from $50,017 to $33,578 (see revised solution).