Question

Pella Corp. is headquartered in Carlisle, Wisconsin. Pella has a Wisconsin state income tax base of $434,000. Of this amount, $76,800 was nonbusiness income. Pella's Wisconsin apportionment factor is 28.52 percent. The nonbusiness income allocated to Wisconsin was $61,900. Assuming a Wisconsin corporate tax rate of 7.75 percent, what is Pella's Wisconsin state tax liability

Answer 1

$12,642

Step-by-step explanation:

The computation of the state tax liability is given below:

Tax Liability is

= [{(Income Tax Base - Non Business Income) × Apportionment Factor} + Allocated Non- business Income] × tax rate

= [{($434,000 - $76,800) × 0.2852} + $61,900] x 0.0775

= [$101,873.44 + $61,250] × 0.0775

= 163,123.44 × 0.0775

= $12,642