Question

June Corp, $5,000,000 of taxable income. One of the states in which it does business is Kentucky, which uses the three-factor formula with a double-weighted sales factor to apportion income. If June Corp’s property factor in Kentucky is 0.05, its payroll factor is 0.05, and its sales factor is 0.15, what amount of its taxable income has to be apportioned to Kentuck

Sam manufacturing Inc. does business in two states. Each state used the single-factor sales formula to apportion income. State 1 imposes a 5% tax on income, and State 2 imposes an 8% tax on income. The company’s federal taxable income was $3,000,000. Each state uses federal taxable income as its base for imposing its tax. If the company has $1.5 million in sales in State 1 and $1 million in sales in State 2 and no income allocable to either state, how much does the company owe each state?

3. Holt Industries, Inc. does business in State 1. That state uses federal taxable income as the starting point for calculating state income tax. Interest on state obligations is taxed, but interest on federal obligations is not taxed. Only straight-line depreciation may be deducted. Holt Industries’ income and expenses for the year are:

Sales                                                                                $200,000

Interest income on federal obligations                       $4,000

Interest income on state obligations                         $5,000

State taxes                                                                     $10,000

MACRS                                                                            $15,000

(straight-line depreciation)                                          $8,000

Cost of sales                                                                   $60,000

Other business expenses                                            $20,000

Other business expenses                                            $20,000

Answer 1

1)	June Corp Taxable Income		5000000
	Three factor formula
	Property factor	0.05
	Payroll factor	0.05
	Sales factor (2*0.15)	0.3
			0.4
	Average of three factor formula - 0.40/3		0.13333333
	Amount to be apportioned to Kentuck		666666.667
2)	State 1		5% tax on income
	State 2		8% tax on income
	Company's federal taxable income		$3,000,000
	Sales on state 1		1500000
	Sales on state 2		1000000
	Total Sales		2500000
	Taxable Income of State 1 - 300000*1500000/2500000		180000
	Taxable Income of State 2 - 300000*1000000/2500000		120000
	Tax of State 1 180000*5%		9000
	Tax of State 2 120000*8%		9600
3)	Sales		200000
	Interest Income on state obligations		5000
	Total Income		205000
	Less : State Taxes		-10000
	Depreciation		-15000
	Cost of Sales		-60000
	Other Business Expenses		-20000
	Other Business Expenses		-20000
	Taxable Income		80000