Question

State taxable income is calculated by multiplying business income by the ________ factor and then adding any nonbusiness income allocated to the state.

a) Allocation
b) Apportionment
c) Statehood
d) Netting

Answer 1

State taxable income is calculated by multiplying business income by the apportionment factor and then adding any nonbusiness income allocated to the state.

Step-by-step explanation:

State taxable income is calculated by multiplying business income by the apportionment factor and then adding any nonbusiness income allocated to the state.

Apportionment is the method used to divide income among different states when a business operates in multiple states. It allocates a portion of the overall income to each state based on factors such as sales, payroll, and property.

For example, if a business has $100,000 in income and 60% of its sales were in one state, then the apportionment factor for that state would be 0.60. The state taxable income for that state would be $100,000 multiplied by 0.60.