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

question 4

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.State Y equally weights the three factors, while State Z assigns double weight to the sales factor.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 Z taxable income for the current year.

• A)$1,866,666
• B)$1,400,000
• C)$1,750,000
• D)$2,400,000
• E)$1,600,000

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Definitions:

Dualistic Thinking

This is a cognitive tendency to see situations and issues in black and white, often characterizing options as just right or wrong with no middle ground.

Evolution

The process by which different kinds of living organisms have developed and diversified from earlier forms during the history of the earth.