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Subject: Business Tax Brood Corporation realized $1.5 million of taxable income from the sales of...

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Accounting

Subject: Business Tax

Brood Corporation realized $1.5 million of taxable income from the sales of its products in States A and B. Both states employ a three-factor apportionment formula that equally weights sales, property, and payroll. Broods gross sales, payroll, and property attributable to or located in the states are shown below. Based on this data, determine the tax liability for State A and State B, and the total effective tax rate.

State A State B Totals
Gross Sales $2,000,000 $3,000,000 $5,000,000
Payroll 1,500,000 0 1,500,000
Property 2,500,000 0 2,500,000
Income tax rate 10% 5%

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