Cromwell Corporation does business in two states, A and B. State A uses an equal-weighted, three-factor apportionment formula and has a 5 percent state tax rate. State B uses an apportionment formula that double-weights the sales factor and has a 6 percent state tax rate. Cromwell's state-level taxable income, before apportionment, is $2 million. It has identified the following components of its sales, payroll, and property factors: Sales Payroll Average property State A $ 6,000,000 2,000,000 1,000,000 State B $ 4,000,000 1,200,000 800,000 Total $ 10,000,000 3,200,000 1,800,000 Required: a. Calculate Cromwell's apportionment factors, income apportioned to each state, and state tax liability. 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 Cromwell's state tax liability be for each state?

Cromwell Corporation does business in two states, A and B. State A uses an equal-weighted, three-factor apportionment formula and has a 5 percent state tax rate. State B uses an apportionment formula that double-weights the sales factor and has a 6 percent state tax rate. Cromwell's state-level taxable income, before apportionment, is $2 million. It has identified the following components of its sales, payroll, and property factors: Sales Payroll Average property State A $ 6,000,000 2,000,000 1,000,000 State B $ 4,000,000 1,200,000 800,000 Total $ 10,000,000 3,200,000 1,800,000 Required: a. Calculate Cromwell's apportionment factors, income apportioned to each state, and state tax liability. 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 Cromwell's state tax liability be for each state?

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter16: Multijurisdictional Taxation

Section: Chapter Questions

Problem 3CE

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Cromwell Corporation does business in two states, A and B. State A uses an equal-weighted, three-factor apportionment formula and has a 5 percent state tax rate. State B uses an apportionment formula that double-weights the sales factor and has a 6 percent state tax rate. Cromwell's state-level taxable income, before apportionment, is $3.5 million. It has identified the following components of its sales, payroll, and property factors: Sales Payroll Average property Required A Required B State A $ 7,500,000 3,500,000 2,500,000 Required: a. Calculate Cromwell's apportionment factors, income apportioned to each state, and state tax liability. 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 Cromwell's state tax liability be for each state? Complete this question by entering your answers in the tabs below.…
Cromwell Corporation does business in two states, A and B. State A uses an equal-weighted, three-factor apportionment formula and has a 5 percent state tax rate. State B uses an apportionment formula that double-weights the sales factor and has a 6 percent state tax rate. Cromwell's state-level taxable income, before apportionment, is $3.5 million. It has identified the following components of its sales, payroll, and property factors: Sales Payroll Average property Required: State A $ 7,500,000 3,500,000 2,500,000 State B $ 4,750,000 2,700,000 1,550,000 Total $ 12,250,000 6,200,000 4,050,000 a. Calculate Cromwell's apportionment factors, income apportioned to each state, and state tax liability. 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 Cromwell's state tax liability be for each state? Answer is not…
Oldham Incorporated conducts business in State M and State N, which both use the UDITPA three-factor formula to apportion income. State M's corporate tax rate is 4.5 percent, and State N's corporate tax rate is 7 percent. This year, Oldham had the following sales, payroll, and property (in thousands of dollars) in each state: Gross receipts from sales Payroll expense Property costs State M $ 3,000 800 900 State N $ 7,500 1,200 1,000 Total $ 10,500 2,000 1,900 Required: If Oldham's before-tax income was $3 million, compute its State M and State N tax. (Round all apportionment factors to 4 decimal places, e.g., 47.15% would be 0.4715. Enter "Apportionment percentage" and "Tax rate" in decimals and not in percentage. Do not round any intermediate values. Enter your answers in dollars and not in millions or thousands of dollars.)
Oldham Incorporated conducts business in State M and State N, which both use the UDITPA three-factor formula to apportion income State M's corporate tax rate is 4.5 percent, and State N's corporate tax rate is 7 percent. This year, Oldham had the following sales, payroll, and property (in thousands of dollars) in each state: Gross receipts from sales Payroll expense Property costs State M 3,000 800 900 State N $ 7,500 1,200 1,000 Total $ 10,500 2,000 1,900 Required: Oldham's before-tax income was $3 million. Compute Oldham's State M and State N tax if State N uses an apportionment formula in which the sales factor is double-weighted. (Round all apportionment factors to 4 decimal places, e.g., 47.15% would be 0.4715. Enter "Apportionment percentage" and "Tax rate" in decimals and not in percentage. Do not round any intermediate values. Enter your answers in dollars and not in millions or thousands of dollars.)
Herger Corporation does business in California, Nevada, and Oregon, and has nexus in these states as well. Herger’s California state tax base was $943,500 after making the required federal/state adjustments. Herger’s federal tax return contains the following items: Item $ Federal T-note interest income 5,900 Nevada municipal bond interest income 3,690 California municipal bond interest income 5,500 Interest expense related to T-note interest income 1,540 Royalty income 181,000 Travel expenses 10,100 Determine Herger’s California business income.
Herger Corporation does business in California, Nevada, and Oregon and has income tax nexus in these states as well. Herger's California state tax base was $939,500 after making the required federal/state adjustments. Herger's federal tax return contains the following items: Item Amount Federal T-note interest income $ 4,700 Nevada municipal bond interest income $ 4,040 California municipal bond interest income $ 6,400 Interest expense related to T-note interest income $ 1,710 Royalty income $ 112,000 Travel expenses $ 9,300 Determine Herger's business income.
Beckett Corporation has nexus with States A and B. Apportionable income for the year totals $1,190,000 . Beckett's apportionment factors for the year use the following data. Compute Beckett's B taxable income for the year; B uses a three-factor apportionment formula with a double-weighted sales factor. State AState BTotalSales$1,428,000$856,800$2,284,800Property$238,000$0 $238,000Payroll$357,000$0 $357,000
Jurisdiction B levies a flat 7 percent tax on the first $5 million of annual corporate income. Required: Jersey Incorporated generated $2.7 million income this year. Compute Jersey’s income tax and determine its average and marginal tax rate on total income. Leray Incorporated generated $7.4 million income this year. Compute Leray’s income tax and determine Leray’s average and marginal tax rate on total income. What type of rate structure does Jurisdiction B use for its corporate income tax?
Ashton Corporation is headquartered in Pennsylvania and has a state income tax base there of $550.000. Of this amount, $89.000 was nonbusiness income. Ashton's Pennsylvania apportionment factor is 41.70 percent. The nonbusiness income allocated to Pennsylvania was $47,500. Assuming a Pennsylvania corporate tax rate of 8.25 percent, what is Ashton's Pennsylvania state tax liability? Note: Round your answer to the nearest whole dollar amount. State tax liability → $ 19,860
Company K operates in a jurisdiction that levies an income tax with the following rate structure: Percentage Rate Bracket Income from -0- to $75,000 Income from $75,001 to $150,000 Income in excess of $150,000 Company K incurs a $35,000 deductible expense. Required: a. Compute the current year tax savings from the deduction assuming that Company K's taxable income before considering the additional deduction is $71,600. b. Compute the current year tax savings from the deduction assuming that Company K's taxable income before considering the additional deduction is $178,000. c. Compute the current year tax savings from the deduction assuming that Company K has a $7,250 loss before considering the additional deduction. 7% 10 15 Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute the current year tax savings from the deduction assuming that Company K's taxable income before additional deduction is $71,600. Tax savings
Ashton Corporation is headquartered in Pennsylvania and has a state income tax base there of $543,000. Of this amount, $63,000 was nonbusiness income. Ashton's Pennsylvania apportionment factor is 42.35 percent. The nonbusiness income allocated to Pennsylvania was $28,250. Assuming a Pennsylvania corporate tax rate of 8.25 percent, what is Ashton's Pennsylvania state tax liability?
Jurisdiction B levies a flat 7 percent tax on the first $5 million of annual corporate income. a. Jersey Inc. generated $3.6 million income this year. Compute Jersey's income tax and determine its average and marginal tax rate on total income. b. Leray Inc. generated $9.2 million income this year. Compute Leray's income tax and determine Leray's average and marginal tax rate on total income. c. What type of rate structure does Jurisdiction B use for its corporate income tax? Complete this question by entering your answers in the tabs below. Required A Required B Required C Jersey Inc. generated $3.6 million income this year. Compute Jersey's income tax and determine its average and marginal tax rate on total income. (Enter income tax answer in dollars not in millions of dollars.) Income tax Average tax rate Marginal tax rate % % Required A Required B >