Cromwell Corporation does business in two states, A and B. State A uses an equal-weighted, three-factor apportionment formula and has a 6 percent state tax rate. State B uses an apportionment formula that double-weights the sales factor and has a 5.5 percent state tax rate. Cromwells state-level taxable income, before apportionment, is $3.7 million. It has identified the following components of its sales, payroll, and property factors:

	State A	State B	Total
Sales	$ 7,700,000	$ 4,850,000	$ 12,550,000
Payroll	3,700,000	2,900,000	6,600,000
Average property	2,700,000	1,650,000	4,350,000

Required:

Calculate Cromwells apportionment factors, income apportioned to each state, and state tax liability.

State B is considering changing its apportionment formula to place 100 percent of the weight on the sales factor, ignoring payroll and property for apportionment purposes. Given its current levels of activity, what would Cromwells state tax liability be for each state?

Complete this question by entering your answers in the tabs below.

Required A

Required B

Calculate Cromwells apportionment factors, income apportioned to each state, and state tax liability. Note: Round all apportionment factors to 2 decimal places, e.g., 0.4715 would be entered as 47.15% and final answer dollar values to the nearest whole dollar. Consider your intermediate values in dollars and not in millions. Enter your answers also in dollars and not in millions of dollars.

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	State A		State B
Apportionment factors		%	80.00	%
Income apportioned
State tax liability

Required B

State B is considering changing its apportionment formula to place 100 percent of the weight on the sales factor, ignoring payroll and property for apportionment purposes. Given its current levels of activity, what would Cromwells state tax liability be for each state? Note: Round all apportionment factors to 2 decimal places and final answer dollar values to the nearest whole dollar. Consider your intermediate values in dollars and not in millions. Enter your answers also in dollars and not in millions of dollars.

Show less

	State A	State B
State tax liability