ExpertEasy1 markMultiple Choice
CPA · Question 42 · Area 3: Entity Tax Compliance
Company A operates in State X and State Y. State X uses a single-sales factor apportionment formula. State Y uses an equal-weighted three-factor formula (Property, Payroll, Sales). <br/>Company Data:<br/>- Total Sales: $1,000,000 (State X: $800,000)<br/>- Total Payroll: $500,000 (State X: $100,000)<br/>- Total Property: $2,000,000 (State X: $100,000)<br/><br/>What is the apportionment percentage for State X?
Company A operates in State X and State Y. State X uses a single-sales factor apportionment formula. State Y uses an equal-weighted three-factor formula (Property, Payroll, Sales). <br/>Company Data:<br/>- Total Sales: $1,000,000 (State X: $800,000)<br/>- Total Payroll: $500,000 (State X: $100,000)<br/>- Total Property: $2,000,000 (State X: $100,000)<br/><br/>What is the apportionment percentage for State X?
Answer options:
A.
33.3%
B.
10%
C.
80%
D.
35%
How to approach this question
1. Identify State X Formula: Single-Sales Factor.<br/>2. Identify Relevant Data: Sales in X ($800k), Total Sales ($1M).<br/>3. Calculate: $800,000 / $1,000,000 = 80%.<br/>4. Ignore Payroll and Property for State X.
Full Answer
C.80%✓ Correct
C
Apportionment for State X is based solely on sales. $800,000 / $1,000,000 = 80%.
Common mistakes
Calculating a three-factor average when the state uses single-sales factor.
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