Korn, Co Was Incorporated in Delaware

question 103

Multiple Choice

Korn, Co. was incorporated in Delaware. It has production, distribution, and sales facilities in Kansas and Nebraska. All of Korn's customers reside in Kansas or Nebraska. Assume that both states use the UDITPA formula for apportionment of income. The corporation is investing in new equipment that cost $900,000. The equipment could be used in either the Kansas or Nebraska production facilities. Assume that Kansas' corporate income tax rate is 7% and Nebraska's is 8.5%. Should the equipment be placed in Kansas or Nebraska to minimize Korn's state income tax?

• A) Kansas.
• B) Nebraska.
• C) Either state, because state income tax will be unaffected by this choice.
• D) Korn should place the equipment in a third state in which it does not have nexus.

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Definitions:

OSHA Violation

A failure to comply with standards and regulations set by the Occupational Safety and Health Administration, potentially endangering workers.

Discretionary Fine

A penalty imposed by a person in authority, who has the discretion to determine both the necessity and the amount of the fine.

Substantial Probability

means a significant likelihood of an event occurring, used in various contexts to assess risks or outcomes.

Serious Physical Harm

Significant or severe injury to the body that can result in lasting physical damage or impairment.