Question

Ashton Corporation is headquartered in Pennsylvania and has a state income tax base there of $543,000. Of this amount, $63,000 was nonbusiness income. Ashton’s Pennsylvania apportionment factor is 42.35 percent. The nonbusiness income allocated to Pennsylvania was $28,250.

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

State Tax liability = ([(Tax base - Nonbusiness income) * Apportionment factor] + Nonbusiness income) * Tax rate

State Tax liability = ([($543,000 - $63,000) * 42.35%] + $28,250) * 8.25%

                             = $231,530 * 8.25%

                            = $19,101

Hence, State Tax Liability is $19,101.