LO.4, 5 Jest Corporation owns and operates two facilities that manufacture paper products. One of the facilities
Question:
LO.4, 5 Jest Corporation owns and operates two facilities that manufacture paper products. One of the facilities is located in State D, and the other is located in State E. Jest generated $2.8 million of taxable income, consisting of $2 million of income from its manufacturing facilities and an $800,000 gain from the sale of nonbusiness property, located in E. E does not distinguish between business and nonbusiness income, but D apportions only business income. Jest’s activities within the two states are outlined below.
State D State E Total Sales of paper products $3,000,000 $7,000,000 $10,000,000 Property 600,000 1,500,000 2,100,000 Payroll 1,200,000 1,800,000 3,000,000 Both D and E utilize a three-factor apportionment formula, under which sales, property, and payroll are equally weighted. Determine the amount of Jest’s income that is subject to income tax by each state.
Step by Step Answer:
South Western Federal Taxation 2013 Corporations Partnerships Estates And Trusts
ISBN: 9781133495574
36th Edition
Authors: William H. Hoffman, William A. Raabe, James E. Smith, David M. Maloney