Question
Chipper Corporation realized $1,000,000 apportionable taxable income from the sales of its products in States X and Z. Both states use the same measure of
Chipper Corporation realized $1,000,000 apportionable taxable income from the sales of its products in States X and Z. Both states use the same measure of pre-apportionment taxable income. 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.
State X State Z Totals
Sales $1,000,000 $2,000,000 $3,000,000
Property 0 2,300,000 2,300,000
Payroll 0 1,900,000 1,900,000
X utilizes a sales-only factor in its three-factor apportionment formula. How much of Chipper’s apportionable income is taxed by X?
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