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.)

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Business

Bronson Krueger

2 January, 13:39

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.)

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Troy Mills · Answer 1

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