Boot Corporation Is Subject to Income Tax in States a and B.Boot's

question 60

Multiple Choice

Boot Corporation is subject to income tax in States A and B.Boot's operations generated $200,000 of apportionable income, and its sales and payroll activity and average property owned in each of the states is as follows. $$\begin{array} { l r r r } & \text { State A } & \text { State B } & \text { Totals } \\\text { Sales } & \$ 200,000 & \$ 600,000 & \$ 800,000 \\\text { Payroll } & 100,000 & 50,000 & 150,000 \\\text { Property } & 200,000 & 50,000 & 250,000\end{array}$$ ? How much more (less) of Boot's income is subject to A income tax if, instead of using an equally-weighted three-factor apportionment formula, A uses a formula with a double-weighted sales factor?

• A)($50,000)
• B)$50,000
• C)$16,100
• D)($16,100)

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Definitions:

Corporate Sales Policies

Guidelines and principles set by a corporation to standardize and direct its sales practices, ensuring coherence and efficiency in sales operations.

Straight Commission

A compensation method where salespeople or employees are paid based purely on the sales they generate, as a percentage of the sales amount.

Small Commission

A relatively low percentage or fixed fee paid to an agent or salesperson for facilitating a sale or transaction.

Subjective Measures

Assessments based on personal opinions, interpretations, points of view, or judgments rather than on quantifiable or objective criteria.