Adams Corporation Owns and Operates Two Manufacturing Facilities, One in State

question 60

Multiple Choice

Adams Corporation owns and operates two manufacturing facilities, one in State X and the other in State Y. Due to a temporary decline in the corporation's sales, Adams has rented 20% of its Y facility to an unaffiliated corporation. Adams generated $1,000,000 net rental income and $5,000,000 income from manufacturing. Adams is incorporated in Y. For X and Y purposes, rental income is classified as allocable nonbusiness income. By applying the statutes of each state, Adams determined that its apportionment factors are .65 for X and .35 for Y.
Adams's income attributed to X is:

• A) $0.
• B) $3,250,000.
• C) $3,900,000.
• D) $5,000,000.
• E) $6,000,000.

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Definitions:

Variables

Are elements, traits, or conditions that can change or vary within an experiment or study, potentially influencing the results.

Assumption

A belief or statement taken to be true without proof, often forming the basis for further reasoning or behavior.

Cognitive Psychology

The branch of psychology that studies mental processes including how people think, perceive, remember, and learn.

Social Psychology

The exploration of how the real, perceived, or suggested presence of others affects individuals' mental states, emotions, and actions.