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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 10 months ago
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