Question

In: Accounting

Ashton Corporation is headquartered in Pennsylvania and has a state income tax base there of $580,000....

Ashton Corporation is headquartered in Pennsylvania and has a state income tax base there of $580,000. Of this amount, $61,000 was nonbusiness income. Ashton’s Pennsylvania apportionment factor is 40.30 percent. The nonbusiness income allocated to Pennsylvania was $31,500.

Assuming a Pennsylvania corporate tax rate of 8.25 percent, what is Ashton’s Pennsylvania state tax liability? (Round your answer to the nearest whole dollar amount.)

State tax liability

Solutions

Expert Solution

Solution:
Ashton’s Pennsylvania state tax liability =$19,854
Working Notes:
Computation of Ashton’s Pennsylvania state tax liability
State tax base $580,000 a= Given
Less Total allocated income $61,000 b= Given
[total nonbusiness income]
Apportionable income $519,000 c=a-b
Pennsylvania apportionment factor 40.30% d=given
Pennsylvania apportioned Income $209,157 e=c x d
[ Apportionable income x Pennsylvania apportionment factor ]
[$519,000 x 40.30%]
Pennsylvania allocated income $31,500 f = given
[nonbusiness income allocated to Pennsylvania]
Taxable income at Pennsylvania $240,657 g=e+f
[$209,157 + $31,500]
Pennsylvania corporate tax rate 8.25% h=given
Pennsylvania state tax liability 19854.2025 i=g x h
[$240,657 x 8.25%]
Hence,
Pennsylvania state tax liability 19,854
Please feel free to ask if anything about above solution in comment section of the question.

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Consider a corporation whose taxable income without state income tax is                               &n
Consider a corporation whose taxable income without state income tax is                                                                                                                                                                                                                                                                                               Gross revenue ​$3,800,000 All expenses ​$1,600,000 If the marginal federal tax rate is​ 35% and the marginal state rate is​ 5%, compute the combined state and federal taxes using the two methods. State taxable income is ​$_________. ​(Round to the nearest​ dollar.) State income tax is ​$_________. ​(Round to the nearest​ dollar.) Federal taxable income is ​$____________. ​(Round to the nearest​ dollar.) Federal income tax is ​$__________....
Consider a corporation whose taxable income without state income tax is                               &n
Consider a corporation whose taxable income without state income tax is                                                                                                                                                                                                                                                                                               Gross revenue ​$3,600,000 All expenses ​$1,700,000 If the marginal federal tax rate is​ 35% and the marginal state rate is​ 5%, compute the combined state and federal taxes using the two methods. State taxable income is ​$_________. ​(Round to the nearest​ dollar.) State income tax is ​$_________. ​(Round to the nearest​ dollar.) Federal taxable income is ​$____________. ​(Round to the nearest​ dollar.) Federal income tax is ​$__________....
Fallow Corporation is subject to tax only in State X. State income taxes are not deductible...
Fallow Corporation is subject to tax only in State X. State income taxes are not deductible for State X income tax purposes. Fallow generated the following income and deductions: Sales $4,000,000 Cost of sales 2,800,000 State X income tax expense 200,000 Depreciation allowed for Federal tax purposes 400,000 Depreciation allowed for state tax purposes 250,000 Interest income on Federal obligations 40,000 Interest income on State X obligations 30,000 Expenses related to carrying State X obligations 2,000 a. The starting point...
What renders a state income tax unconstitutional? Must the state income tax violate these rules in...
What renders a state income tax unconstitutional? Must the state income tax violate these rules in actual practice, or just in theory, in order for the U.S. Supreme Court to render it unconstitutional? Discuss.
____ is the base used to calculate income tax. a. taxable income b. gross income c....
____ is the base used to calculate income tax. a. taxable income b. gross income c. adjusted gross income d. economic income
Do you feel eliminating income tax and applying a consumption tax will broaden the tax base?...
Do you feel eliminating income tax and applying a consumption tax will broaden the tax base? Why, or why not? What is one thing that you have learned about public finance and budgeting that you want to make sure you carry forward into a career in public administration?
Tatun Inc. pays state income tax at a 5% rate and federal income tax at a...
Tatun Inc. pays state income tax at a 5% rate and federal income tax at a 21% rate. Tatun recently engaged in a transaction in Mexico, which levied a $25,200 income tax on the transaction. Tatun's pretax net income for the current year is $1,913,900. Compute Tatun's total income tax burden assuming that: The Mexican tax is nondeductible for state and federal tax purposes. The Mexican tax is deductible for state and federal tax purposes.
The alternative minimum taxable income (AMTI) is typically ________ the regular income tax base.    A.  ...
The alternative minimum taxable income (AMTI) is typically ________ the regular income tax base.    A.   exactly the same as     B.   smaller than     C.   larger than     D.   about the same as Married TP's filing jointly in 2019. They have five children under age 17 for whom they may claim the child tax credit. Their AGI was $425,000. What amount of child tax credit may they claim on their tax return?    A.   $10,000     B.   $11,000    ...
. Elrond Corporation (EC), headquartered in Rivendell, manufactures state-of-the-art milling machines in Lothlorien in their Elven...
. Elrond Corporation (EC), headquartered in Rivendell, manufactures state-of-the-art milling machines in Lothlorien in their Elven division. EC has two marketing subsidiaries, one in Erebor and one in Shireland, that sell its products. EC is building one new machine, at a cost of $500,000 at their Lothlorien subsidiary. There is no market for the equipment in Lothlorien. The equipment can be sold in Erebor for $1,000,000, but the Ereborian subsidiary would incur transportation and modification costs of $200,000. Alternatively, the...
Tax Drill - Deferred Tax Asset Ion Corporation has income tax expense/payable for book purposes of...
Tax Drill - Deferred Tax Asset Ion Corporation has income tax expense/payable for book purposes of $200,000 and $250,000 for tax purposes. Assume that Ion will only be able to use $30,000 of any deferred tax asset with the balance expiring. As a result, Ion will record a deferred tax asset of $ 50 (incorrect) and a valuation allowance of $ 20 (incorrect) . ???
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT