Ashton Corporation is headquartered in Pennsylvania and has a state income tax base there of $549,000. Of this amount, $77,000 was nonbusiness income. Ashton's Pennsylvania apportionment factor is 42.35 percent. The nonbusiness income allocated to Pennsylvania was $52,500 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.)

State Tax liability = $20822

Explanation:

given data

state income tax base = $549,000

non business income = $77,000

apportionment factor = 42.35 percent

non business income = $52,500

corporate tax rate = 8.25 percent

to find out

what is Ashton's Pennsylvania state tax liability

solution

we get here State Tax liability that is express as

State Tax liability = [ { (tax base - non business income) * apportionment factor } + non business income] * tax rate ... 1

put here value we get

State Tax liability = [ { (tax base - non business income) * apportionment factor } + non business income] * tax rate

State Tax liability = [ { (549,000 - 77,000) * 42.35% } + 52,500 ] * 8.25 %

so State Tax liability = $20822