Question

Ashton Corporation is headquartered in Pennsylvania and has a state income tax base there of $550,000. Of this amount, $89,000 was nonbusiness income. Ashton’s Pennsylvania apportionment factor is 41.70 percent. The nonbusiness income allocated to Pennsylvania was $47,500. Assuming a Pennsylvania corporate tax rate of 8.25 percent, what is Ashton’s Pennsylvania state tax liability? (Round your answer to the nearest whole dollar amount.)

Answer 1

Answer:

The state tax liability is $19,778

Explanation:

The computation of the state tax liability is shown below:

= [({State income tax base - non business income) ×  apportionment factor} + non business income] × corporate tax rate

= [({$550,000 - $89,000) × 41.70% } + $47,500] × 8.25%

= [$461,000 × 41.70%  + $47,500] × 8.25%

= $239,737 × 8.25%

= $19,778