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:

Excessive Amounts

Quantities that exceed what is normal, necessary, or reasonable.

Metabolism

The complex of life-sustaining chemical reactions in organisms, involving the processing or conversion of substances.

Metabolic Processes

The chemical reactions that occur within a living organism in order to maintain life, including digestion and the production of energy.

BMR

Basal metabolic rate, which is the rate of energy expenditure per unit time by endothermic animals at rest.