apportionment_formulas_solution - Solution Multi-state...

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Solution : 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: State A State B State C total Sales 500,000 400,000 300,000 1,200,000 Payroll 100,000 125,000 75,000 300,000 Property 150,000 250,000 100,000 500,000 Income tax rate 9.5% 5.5% 3.0% Required : Compute the income apportioned to each state and the state corporate income tax liability. What tax planning opportunities might you recommend? Relocate some people and/or property to State C. Total state corporate income taxes are reduced from $50,017 to $33,578 (see revised solution).
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This note was uploaded on 09/09/2011 for the course TAX 6845 taught by Professor Kelliher,c during the Fall '08 term at University of Central Florida.

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apportionment_formulas_solution - Solution Multi-state...

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