CPA · Question 57 · Area III: Entity Tax Planning

A corporation operates in State A (tax rate 5%) and State B (tax rate 10%). It has $1,000,000 total income. Apportionment factors allocate 60% to State A and 40% to State B. If the corporation shifts $100,000 of payroll from State B to State A, increasing State A's factor to 70%, what is the state tax savings? (Assume payroll is the only factor for simplicity).