Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
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Chapter 13, Problem 3IRP
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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.…
Chang Corporation is part of a three-corporation unitary business. The group has a water’s edge election in effect with respect to unitary State Q. State B does not apply the unitary concept with respect to its corporate income tax laws. Nor does Despina, a European country to which Saldez paid a $7,000,000 value added tax this year.
Saldez was organized in Despina and conducts all of its business there. Given the summary of operations that follows, determine Chang’s and Elena’s sales factors in States B and Q.
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(info numbers attached)
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…
Chapter 13 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
Ch. 13 - Why does a corporations state income tax cost...Ch. 13 - Prob. 2QPDCh. 13 - Prob. 3QPDCh. 13 - Prob. 4QPDCh. 13 - Borden Inc. conducts a business that spans four...Ch. 13 - Prob. 6QPDCh. 13 - Prob. 7QPDCh. 13 - Prob. 8QPDCh. 13 - Prob. 9QPDCh. 13 - Prob. 10QPD
Ch. 13 - Prob. 11QPDCh. 13 - Prob. 12QPDCh. 13 - Prob. 13QPDCh. 13 - Prob. 14QPDCh. 13 - Prob. 15QPDCh. 13 - Prob. 16QPDCh. 13 - This year, Mesa Inc.s before-tax income was...Ch. 13 - Prob. 2APCh. 13 - Prob. 3APCh. 13 - Prob. 4APCh. 13 - Prob. 5APCh. 13 - Prob. 6APCh. 13 - Prob. 7APCh. 13 - Prob. 8APCh. 13 - Prob. 9APCh. 13 - Prob. 10APCh. 13 - Prob. 11APCh. 13 - Prob. 12APCh. 13 - Prob. 13APCh. 13 - Prob. 14APCh. 13 - Prob. 15APCh. 13 - Prob. 16APCh. 13 - Prob. 17APCh. 13 - Prob. 18APCh. 13 - Prob. 19APCh. 13 - Prob. 20APCh. 13 - Prob. 21APCh. 13 - Prob. 22APCh. 13 - Prob. 23APCh. 13 - Prob. 24APCh. 13 - Prob. 25APCh. 13 - Prob. 26APCh. 13 - Prob. 27APCh. 13 - Prob. 28APCh. 13 - Prob. 29APCh. 13 - Prob. 30APCh. 13 - Prob. 31APCh. 13 - Prob. 32APCh. 13 - Prob. 33APCh. 13 - Prob. 34APCh. 13 - Prob. 35APCh. 13 - Prob. 36APCh. 13 - Prob. 37APCh. 13 - State E wants to encourage the development of a...Ch. 13 - Prob. 2IRPCh. 13 - Prob. 3IRPCh. 13 - Prob. 4IRPCh. 13 - Prob. 5IRPCh. 13 - Prob. 6IRPCh. 13 - Prob. 7IRPCh. 13 - Prob. 8IRPCh. 13 - Prob. 9IRPCh. 13 - Prob. 10IRPCh. 13 - Prob. 11IRPCh. 13 - Prob. 2RPCh. 13 - Prob. 3RPCh. 13 - Prob. 1TPCCh. 13 - Prob. 2TPCCh. 13 - Prob. 3TPCCh. 13 - Prob. 1CPCh. 13 - Prob. 2CP
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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 $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 Required A Required B 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. Apportionment…arrow_forwardHeliot Company operates its business in State H, which levies a 6 percent sales and use tax. This year, Heliot purchased a $785,000 item of tangible property in State K and paid $23,550 sales tax to the state. It also purchased a $857,000 item of tangible property in State L and paid $53,991 sales tax to the state. Firm H transported both items of property into State H for use in its business. Required: Compute the use tax that Heliot owes to State H for the property purchased in State K. Compute the use tax that Heliot owes to State H for the property purchased in State L. Compute the use tax that Heliot owes to State H for the property purchased in State K. Pre credit use tax Sales tax paid to State K Use tax owed to State H Amount Compute the use tax that Heliot owes to State H for the property purchased in State L. Pre credit use tax Sales tax paid to State L Use tax owed to State H Amountarrow_forwardHerger 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.arrow_forward
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