D Corporation Operates in Two States, Y and Z What Is D's State Y Taxable Income for the Current

question 29

Multiple Choice

D Corporation operates in two states, Y and Z.Both states impose a state income tax.For the current year, D has taxable income of $5,000,000 (after state adjustments) .Such income consists of $4,000,000 of business income and $1,000,000 of nonbusiness income attributable solely to State Y.D conducts sufficient activities in both states to create nexus.Both states allocate nonbusiness income and apportion business income using a three-factor formula in which sales, payroll, and property are equally weighted.The current year factors are as follows: $\begin{array}{lll}&\text { State } Y&\text { State } Z\\\text { Sales } & 80 \% & 20 \% \\\text { Property } & 40 \% & 60 \% \\\text { Payroll } & 60 \% & 40 \%\end{array}$ What is D's State Y taxable income for the current year.

• A)$5,000,000
• B)$1,000,000
• C)$3,400,000
• D)$2,400,000
• E)$2,600,000

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Definitions:

IFRS

International Financial Reporting Standards, which are global accounting guidelines providing a common language for business affairs so that company accounts are understandable and comparable across international boundaries.

Lender's Perspective

The viewpoint or concerns of the party providing funds to a borrower, focusing on the return of loaned money with interest.

Accounting Mismatch

Occurs when revenues and expenses or assets and liabilities affecting them are recognized in different periods, potentially misrepresenting financial performance.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) for financial reporting worldwide.