Harper, Inc. is incorporated in State 1 but also has offices in States 2, 3, and...

Harper, Inc. is incorporated in State 1 but also has offices in States 2, 3, and 4. All four states use the Uniform Division of Income for Tax Purposes Act (UDITPA) three-factor formula for determining the state apportionment percentage. Based on the following financial information, what percentages of Harper’s income should be apportioned to States 1 and 2? Round to the nearest whole percentage. Please show your calculations at how you arrived at your answer.

	Gross Sales		Payroll Expense		Property Costs
State 1	$	2,880,000	$	332,800	$	1,000,000
State 2	$	840,000	$	183,200	$	104,000
State 3	$	420,000	$	93,600	$	128,000
State 4	$	1,660,000	$	280,800	$	136,000
Total	$	5,800,000	$	890,400	$	1,368,000

Solutions

Expert Solution

	Gross Sales	Percentage	Payroll Expense	Percentage	Property Costs	Percentage
State 1	2,880,000	49.6552%	332,800	37.3765%	1,000,000	73.0994%
State 2	840,000	14.4828%	183,200	20.5750%	104,000	7.6023%
State 3	420,000	7.2414%	93,600	10.5121%	128,000	9.3567%
State 4	1,660,000	28.6207%	280,800	31.5364%	136,000	9.9415%
Total	5,800,000	100.0000%	890,400	100.0000%	1,368,000	100.0000%

For Sale
State 1	2880000/5800000	49.6552%
State 2	840000/5800000	14.4828%
Same for all

Percentage	Gross Sales	Payroll Expense	Property Costs	Total	Income should be apportioned (Total / 3)
State 1	49.6552%	37.3765%	73.0994%	160.1310%	53.38%
State 2	14.4828%	20.5750%	7.6023%	42.6601%	14.22%
State 3	7.2414%	10.5121%	9.3567%	27.1102%	9.04%
State 4	28.6207%	31.5364%	9.9415%	70.0986%	23.37%


What percentages of Harper’s income should be apportioned to States 1 and 2?
State 1	53%
State 2	14%

ekkarill92 answered 1 year ago

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