ExpertHard1 markMultiple Choice
CPA · Question 48 · Area V: Entity Taxation
A multistate corporation has the following factors: Sales in State A $500,000; Total Sales $1,000,000. Payroll in State A $100,000; Total Payroll $1,000,000. Property in State A $200,000; Total Property $1,000,000. State A uses a double-weighted sales factor apportionment formula. What is the apportionment percentage for State A?
A multistate corporation has the following factors: Sales in State A $500,000; Total Sales $1,000,000. Payroll in State A $100,000; Total Payroll $1,000,000. Property in State A $200,000; Total Property $1,000,000. State A uses a double-weighted sales factor apportionment formula. What is the apportionment percentage for State A?
Answer options:
A.
26.67%
B.
32.5%
C.
50%
D.
40%
How to approach this question
1. Calc Factors: Sales 50%, Payroll 10%, Property 20%. 2. Double Weight Sales: 50 + 50 + 10 + 20 = 130. 3. Divide by 4 (Sales x2 + Pay + Prop): 130 / 4 = 32.5%.
Full Answer
B.32.5%✓ Correct
Formula: (Sales Factor x 2 + Payroll Factor + Property Factor) / 4. <br/>Sales Factor = 50%. Payroll = 10%. Property = 20%. <br/>(50 + 50 + 10 + 20) / 4 = 130 / 4 = 32.5%.
Common mistakes
Dividing by 3 instead of 4 when using double-weighted sales.
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