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How would you actually calculate the Sales Factor Apportionment of a company?

A:

The basic components of sales of a company establish the percentage to be apportioned as taxable. The domestic sales of a company as a percentage of the total sales of the company establish that exact percentage. The exact percentage is then applied to total Profits of the company. The result is the amount of taxable income available to the U.S.

For example, foreign Pharmaceuticals Corporation (FPC) sells $10 billion of its products to customers around the world. $6 billion of those sales (60% of total sales) are made to U.S. customers. FPC’s worldwide profit is $1 billion, therefore, $600 million of that profit would be taxed as U.S. profits.


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