Reference no: EM133335650
Assignment:
Finer Pet Foods Corporation (FPF) is a New York Subchapter S corporation that manufactures "human grade" pet food for dogs and cats. FPF offers a whole range of gourmet pet foods and treats, and has its own store on Broadway in New York. FPF has $5,000,000 in property and $1,500,000 payroll in New York , but no property or payroll in California. FPF receives all of its orders for its products by phone, mail, or its website (over the internet) at its office in New York . The website enables customers to search for items, read product descriptions, select items for purchase, choose among delivery options, and pay for items.
FPF does, however, have employees who come to California to exhibit their food products at various trade shows and dog shows. They were in California five days and took orders for their food products. They took the orders back to New York for approval and processing.
In 2022, FPF reported net income of $10,000,000 (all business income). FPF. shipped via common carrier $2,000,000 worth of its $30,000,000 in sales to California customers.
FPF also owned 25% of Planet Friendly Plastic, Inc., (PFP) a company involved in the production of climate friendly pet food packaging. PFP is located 100% in California. They sold the investment for $5,000,000 in 2022. The sale produced a gain of $1,600,000. FPF had purchased the ownership interest three years ago as they thought that use of climate friendly packaging was the right approach for managing climate change. They were able to successfully employ the packaging techniques of PFP in their production process which was located in New York. Over the three years they owned PFP, three of the senior technicians of PFP re-located to New York to assist in the installation of the equipment/software to incorporate their production process in FPF's production facility.
Based on the above facts, answer the following questions:
1) Does Finer Pet Foods have a filing requirement in California?
2) Determine the California apportionment factor for the year 2022.
3) Determine the taxable income reportable to California and the California tax payable by the S Corporation to the state.