Question

In: Accounting

Sharon Inc. is headquartered in State X and owns 100 percent of Carol, Josey, and Janice...

Sharon Inc. is headquartered in State X and owns 100 percent of Carol, Josey, and Janice Corps, which form a single unitary group. Assume sales operations are within the solicitation bounds of Public Law 86-272. Each of the corporations has operations in the following states:

Domicile State Sharon Inc.
State X
(throwback)
Carol Corp
State Y
(throwback)
Josey Corp
State Z
(nonthrowback)
Janice Corp
State Z
(nonthrowback)
Dividend income $ 1,700 $ 475 $ 385 $ 660
Business income $ 58,200 $ 34,250 $ 17,800 $ 17,300
Sales: State X $ 76,000 $ 19,000 $ 17,900 $ 15,400
State Y $ 48,250 $ 8,000
State Z $ 26,800 $ 35,750 $ 10,100
State A $ 19,500
State B $ 16,800 $ 19,500
Property: State X $ 74,250 $ 22,400 $ 18,200
State Y $ 87,750
State Z $ 42,750 $ 38,250
State A $ 52,250
Payroll: State X $ 16,600 $ 12,600
State Y $ 41,000
State Z $ 6,000 $ 10,700
State A $ 18,500


Compute the following for State X assuming a tax rate of 15 percent. (Use an equally weighted three-factor apportionment. Do not round intermediate calculations. Round apportionment factors to 4 decimal places. Round other answers to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.)

a. Calculate the State X apportionment factor for Sharon Inc., Carol Corp., Josey Corp., and Janice Corp.

Apportionment factors: State X
Sharon
Carol
Josey
Janice


b. Calculate the business income apportioned to State X.

State X
Business Income

c. Calculate the taxable income for State X for each company.

State taxable income reported: State X
Sharon
Carol
Josey
Janice

d. Determine the tax liability for State X for the entire group.

State X
Tax liability

Solutions

Expert Solution

Solution:

Calculation the State X apportionment factor for Sharon Inc., Carol Corp., Josey Corp., and Janice Corp and Calculation the business income apportioned to State X and Calculation of the Tax Liability and Taxable Income:

Josey has no nexus in State X because it has no property or payroll there (no physical presence). The State X tax liability is $8,158 calculated as follows:

Sharon Carol Josey (No NEXUS) Janice
Sales X $76,000 $19,000 $17,900 $15,400
Total $112,300 $94,050 $61,650 $45,000
Property X $74,250 $22,400 $0 $18,200
Total $126,500 $110,150 $42,750 $56,450
Payroll X $16,600 $12,600 $0 $0
Total $16,600 $53,600 $6,000 $29,200
Sales 0.68 0.20 0.34
Property 0.59 0.20 0.32
Payroll 1.00 0.24 0.00
2.27 0.64 0.66
Apportionment Factor 0.7333 0.18 0.2222
Income $58,200 $34,250 $17,300
Apportioned Income $42,678 $6,165 $3,844
Allocated Income $1,700 $0 $0
State Taxable Income $44,378 $6,165 $3,844 $54,387 Taxable Income
15% Tax Rate
$8,158 State Tax Liability

Related Solutions

Sharon Inc. is headquartered in State X and owns 100 percent of Carol, Josey, and Janice...
Sharon Inc. is headquartered in State X and owns 100 percent of Carol, Josey, and Janice Corps, which form a single unitary group. Assume sales operations are within the solicitation bounds of Public Law 86-272. Each of the corporations has operations in the following states: Domicile State Sharon Inc. State X (throwback) Carol Corp State Y (throwback) Josey Corp State Z (nonthrowback) Janice Corp State Z (nonthrowback) Dividend income $ 1,700 $ 475 $ 385 $ 660 Business income $...
Sharon Inc. is headquartered in State X and owns 100 percent of Carol, Josey, and Janice...
Sharon Inc. is headquartered in State X and owns 100 percent of Carol, Josey, and Janice Corps, which form a single unitary group. Assume sales operations are within the solicitation bounds of Public Law 86-272. Each of the corporations has operations in the following states: Domicile State Sharon Inc. State X (throwback) Carol Corp State Y (throwback) Josey Corp State Z (nonthrowback) Janice Corp State Z (nonthrowback) Dividend income $ 1,790 $ 535 $ 635 $ 925 Business income $...
Sharon Inc. is headquartered in State X and owns 100 percent of Carol Corp., Josey Corp.,...
Sharon Inc. is headquartered in State X and owns 100 percent of Carol Corp., Josey Corp., and Janice Corp., which form a single unitary group. Assume sales operations are within the solicitation bounds of Public Law 86-272. Each of the corporations has operations in the following states: Domicile State Sharon Inc. State X (throwback) Carol Corp. State Y (throwback) Josey Corp. State Z (nonthrowback) Janice Corp. State Z (nonthrowback) Dividend income $ 1,700 $ 475 $ 385 $ 660 Business...
Sharon Inc. is headquartered in State X and owns 100 percent of Carol Corp., Josey Corp.,...
Sharon Inc. is headquartered in State X and owns 100 percent of Carol Corp., Josey Corp., and Janice Corp., which form a single unitary group. Assume sales operations are within the solicitation bounds of Public Law 86-272. Each of the corporations has operations in the following states: Domicile State Sharon Inc. State X (throwback) Carol Corp. State Y (throwback) Josey Corp. State Z (nonthrowback) Janice Corp. State Z (nonthrowback) Dividend income $ 1,220 $ 565 $ 345 $ 685 Business...
23- Required information [The following information applies to the questions displayed below.] Sharon Inc. is headquartered...
23- Required information [The following information applies to the questions displayed below.] Sharon Inc. is headquartered in State X and owns 100 percent of Carol Corp., Josey Corp., and Janice Corp., which form a single unitary group. Assume sales operations are within the solicitation bounds of Public Law 86-272. Each of the corporations has operations in the following states: Domicile State Sharon Inc. State X (throwback) Carol Corp. State Y (throwback) Josey Corp. State Z (nonthrowback) Janice Corp. State Z...
1. Henry owns 100 percent of the stock in Family Business, Inc. a. Henry gives 40...
1. Henry owns 100 percent of the stock in Family Business, Inc. a. Henry gives 40 percent of the stock outright to his spouse, Wanda. Henry also creates a trust for Wanda’s benefit that qualifies for the marital deduction as Qualified Terminable Interest Property, and he transfers 40 percent of the stock to it. Henry also gives 5 percent of the stock to each of his four children. How will the gifts be valued? b. Instead, Henry dies owning all...
Leona, whose marginal tax rate on ordinary income is 39.6 percent, owns 100 percent of the...
Leona, whose marginal tax rate on ordinary income is 39.6 percent, owns 100 percent of the stock of Henley Corporation. This year, Henley generates $1 million of taxable income. Use Appendix C and Corporate tax rate schedule. a.If Henley wants to pay all of its after-tax earnings to Leona as a dividend, calculate the amount of the dividend payment. b.Calculate Leona’s tax due on the dividend computed in part a, and her after-tax cashflow from the dividend receipt. c.Compute the...
When valuing a parent company that owns less than 100 percent of a subsidiary, the minority...
When valuing a parent company that owns less than 100 percent of a subsidiary, the minority interest holder of the subsidiary has a claim on the parent company’s assets. A. True B. False
Paton Corporation, a U.S. corporation, owns 100 percent of the stock of Tappan Ltd, a British...
Paton Corporation, a U.S. corporation, owns 100 percent of the stock of Tappan Ltd, a British corporation, and 100 percent of the stock of Monroe N.V., a Dutch corporation. Monroe has post-1986 undistributed earnings of €726 and post-1986 foreign income taxes of $484. Tappan has post-1986 undistributed earnings of £968 and post-1986 foreign income taxes of $242. During the current year, Tappan paid Paton a dividend of £520, and Monroe paid Paton a dividend of €520. The dividends were exempt...
Call option: Personal finance problem   Carol Krebs is considering buying 100 shares of Sooner​ Products, Inc.,...
Call option: Personal finance problem   Carol Krebs is considering buying 100 shares of Sooner​ Products, Inc., at ​$61 per share. Because she has read that the firm will probably soon receive certain large orders from​ abroad, she expects the price of Sooner to increase to ​$65 per share. As an​ alternative, Carol is considering the purchase of a call option for 100 shares of Sooner at a strike price of $56. The​ 90-day option will cost ​$900. Ignore any brokerage...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT