In general, income for corporation business tax purposes is divided into two categories: business income and nonbusiness income. Business income is apportioned to a state by use of a formula while nonbusiness income is allocated to a particular state. Business income includes income from transactions and activity in the regular course of a taxpayers trade or business. Nonbusiness income is all income other than business income (interest, dividends, capital gains). (Some states apportion all income). Molly Corporation realized Si.5 million of taxable income from the sales of its service products in States A and B. Both states employ a three-factor apportionment formula that equally weighs. sales, property, and payrol. Molly Corporation's gross sales, property and payroll attributable the states is as follows: State A State B Totals Gross sales Property $2,000,000 $2,000,000 $4,000,000 $2,500,000 $2,500 Payroll $1,500,000 $1,500 Income tax rate Apportionment of Taxable Income to State A 10% 5% Sales Factor $2,000,000/$4,000,000 Property Factor $2,500,000/$2,500,000- Payroll Factor $1,500,000/$1,500,000- 50% 100% 100% Sum of Apportionment Factors Taxable Income Apportioned to State A- 83.3% x S 1,500,000-$1,249,500 25096/3-83.3% Tax Rate State A 10% $124,950 Tax Liability, State A Would the tax liability be reduced if State A utilized a single factor apportionment formula only (no payroll or property factors)? If yes, why would a state use this type of apportionment? Why is the current trend among states to use sing le factor market-based sourcing for services