Hernandez which has been an S corporation since inception is subject to tax in S

Hernandez which has been an S corporation since inception is subject to tax in States Y and Z. On Schedule K of its Federal Form 1120S Hernandez reported ordinary income of $500000 from its business taxable interest income of $10000 capital loss of $30000 and $40000 of dividend income from a corporation in which it owns 30%. Both states apportion income by use of a three-factor formula that equally weights sales payroll and the average cost of property; both states treat interest and dividends as business income. In addition both Y and Z follow Federal provisions with respect to the determination of taxable income for a corporation. Y recognizes S status but Z does not. Based on the following information write a memo to the shareholders of Hernandez detailing the amount of taxable income on which Hernandez will pay tax in Y and Z. Hernandez corporate offices are located at 5678 Alabaster Circle Bowling Green KY 42103.State YState ZSales$1000000$800000Property (average cost)500000100000Payroll800000200000