The purpose of this assignment is to assess state taxation and the concept of apportionment. You will prepare a memo (750-1,000 words) for a client who is considering expanding business in multiple states. XYZ Corporation is your client and you regularly communicate with the CFO, Danny Client.
XYZ Corporation is a calendar year taxpayer that manufacturers equipment for businesses in Arizona, Kansas, and Oklahoma. XYZ has manufacturing facilities in Arizona and Oklahoma. There are various employees who reside and work in Kansas. The company headquarters are located in Arizona. A number of employees based in Arizona travel to Colorado and Utah to solicit sales from potential customers. After products are delivered to customers in Colorado and Utah, XYZ sends employees to install the products and conduct training. XYZ generates $100,200,000 of total revenue for all of its locations.
In the memo, address the following:
- Summarize the client facts. Use your own words.
- Determine the client issues: Does XYZ have income tax nexus in Colorado and Utah?
- Provide advisory services by explaining the concept of nexus to the CFO, Danny Client, using the information from Public Law 86-272.
- Summarize the apportionment and allocations that would apply to XYZ if the company is required to file tax returns in Colorado and Utah. Describe the apportionment items and details on how the apportionment is calculated for both states.
Provide the CFO with details of the potential tax and financial impact to XYZ Corporation for conducting business in multiple states.
While APA style is not required for the body of this assignment, solid academic writing is expected, and documentation of sources should be presented using APA formatting guidelines, which can be found in the APA Style Guide, located in the Student Success Center.
This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.
You are required to submit this assignment to LopesWrite. Refer to the LopesWrite Technical Support articles for assistance.
This benchmark assignment assesses the following programmatic competencies:
3.2: Demonstrate the skills required to apply that knowledge in providing tax preparation and advisory services and performing other responsibilities as certified public accountants.