General Corporation Is Taxable in a Number of States

question 155

Multiple Choice

General Corporation is taxable in a number of states. This year, General made a $100,000 sale from its A headquarters to a customer in B. This activity is not sufficient for General to create nexus with B. State A applies a throwback rule, but State B does not. In which state(s) will the sale be included in the sales factor numerator?

• A) $0 in both A and B.
• B) $100,000 in A.
• C) $100,000 in B.
• D) In both A and B, according to the apportionment formulas of each.

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Definitions:

Income Elasticity

A measure of how much the demand for a good or service changes relative to a change in consumers' income.

Housing Property

Real estate that includes residential homes such as single-family houses, apartments, and condos, used for living purposes.

Recession

A period of temporary economic decline during which trade and industrial activity are reduced, usually identified by a fall in GDP in two successive quarters.

Demand Elasticity

A measure of how sensitive the quantity demanded of a good is to a change in its price.