XYZ Inc manufactures metal countertops and other kitchen infrastructure for commercial kitchens that it sells to restaurants and hotels throughout the country. In state 1, XYZ owns a manufacturing plant that accounts for 33% of XYZs total property, employs 47 people who account for 25% of its total payroll, and 5% of its total sales occur there. In state 2, XYZ owns a distribution center that accounts for 47% of XYZs total property, employs 8 people that account for 4% of its total payroll, and 3% of its total sales occur there. In state 3, XYZ owns an office building that it uses for its corporate offices that accounts for 10% of XYZs total property, employs 20 people that account for 41% of its total payroll, and 6% of its total sales occur there. XYZ is incorporated in state 3. In state 4, XYZ does not own any property, but its chief designer lives and works there and supervises a staff of 4 people, and this team accounts for 14% of XYZs total payroll. 8% of XYZs total sales occur there. In state 5, XYZ does not own any property. State 5 is in XYZs best saleswomans territory and she regularly visits there to solicit sales, generating 13% of all of XYZs total sales. ABC Corp. is a commodities trading firm that works exclusively in metals. Companies that work in metal contract with ABC to ensure that they have an adequate supply of metal for the next three years, and to hedge against price fluctuations in the metal markets. ABC is incorporated in state 3. The CEO of ABC is also the CFO of XYZ Inc. Three members of ABCs board also sit on XYZs board. Sharp Kitchen Design Inc. is a state 4 corporation that provides kitchen design services to industrial clients. The employees of Sharp Kitchen Design Inc. are all employees of XYZ, and XYZ pays all of their salaries. Top Notch Installers, Incorporated is a State 5 corporation. Top Notch is one of the regions premiere commercial kitchen installers. Top Notch is a closely held corporation that is owned by the same family that owns XYZ. Top Notch installs all of the XYZ sold kitchens in states 3, 4 and 5, but it also installs for XYZs competitor, ZYX Kitchens Co. in states 1, 4 and 5. XYZ, ABC, Sharp Kitchen and Top Notch all used the same accountant for the past 15 years, just like they shares other back office support. That accountant retired. XYZ is in acquisition talks with ZYX and your firm is advising XYZ on the purchase. After some brief research, you learn that all relevant states are UDITPA three-factor states except for State 4, which is a single sales factor state. All states are unitary states, with states 1, 2 and 3 following the Joyce approach and states 4 and 5 following the Finnigan approach.
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