Explain the allocation and apportionment of a multistate corporation's taxable income. Provide an example. Do you feel the process is complex? Why or why not? When states conduct business across different states, that state must have processes to prevent unfair taxation. There are 2 methods that a state can use to determine the company's tax, apportionment, and allocation. Allocation is designating non-business income to a state tax authority. Allocation applies to assets that are held for investment. Apportionment is determining the percentage of businesses profits based on a jurisdiction's corporate income and other business taxes. Apportionment figures out the percentage by using a formula that calculates the average amount of business income a company will bring in. I don't believe the concept of allocation and apportionment is overly complex once you learn and are aware of each state's jurisdiction