Tax Drill - Business and Nonbusiness Income Haig Corporation, a manufacturer, is a multistate taxpayer that has nexus with States 1 and 2. During the taxable year, Haig's net sales were $2,000,000; $1,200,000 of these sales were made in State 1, and $800,000 were made in State 2. The corporation also received $300,000 from the rental of nonbusiness real property located in State 1. Both states employ a three-factor apportionment formula under which sales, property, and payroll are equally weighted. However, the states do not agree on the definition of apportionable income. Under State 1's tax provisions, nonbusiness rent income is allocable and business income is apportionable, while State 2 requires a corporation to apportion all of its (business and nonbusiness) income. Round your answers to the two decimal places, (e.g. .7468259 is rounded to 74.68%). The sales factor for each of the states is 65.22 X % for State 1 and 34.78 % for State 2. Feedback Check My Work Business income arises from the taxpayer's regular course of business or constitutes an integral part of the taxpayer's regular business. In determining whether an item of income is (apportionable) business income, state courts have developed a variety of approaches to determine what constitutes a taxpayer's regular course of business