In: Accounting
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 |
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% |