When your corporation does business in states other than the one where it is incorporated, it may influence state and local taxes.
Apportionment refers to the division of business income among states by the use of an apportionment formula. Allocation refers to the assignment of non-business income to a particular state.
Understanding how apportionment works so that you can accurately report earnings to the IRS and local governments is crucial for corporations that operate in multiple states. It is important to understand which additional taxes apply, or you may find yourself paying double tax on some of those earnings.