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NCR Frontliners 2017 Tax
NCR Frontliners 2017 Tax
NCR Frontliners 2017 Tax
Answer Section
MULTIPLE CHOICE
Not all of the P500,000 is subject to tax. The amount of P400,000 is excluded from gross income, hence not
subject to tax because it is the amount received by Michael, as a return of the premiums paid by her under a
life insurance contract at the maturity of the term mentioned in the contract. The premiums returned are not
income but return of capital. They represent earnings which were previously taxed.
On the other hand, the amount of P100,000 is subject to tax because it represents income being interest or
earnings of the premium and not return of capital.
On the other hand, the amount of P750,000 is subject to tax because it represents income being interest or
earnings of the premium and not return of capital.
TOP: Income Tax Individuals
13. ANS: D
SOL:
Total insurance proceeds 500,000
Less: Total premiums paid 490,000
Income from insurance 10,000
Plus: Reimbursement of premiums 40,000
Total income on the policy 50,000
The P40,000 reimbursement of premiums paid would be considered as a reduction of the total premiums paid.
Thus, only the amount of P450,000 is considered the exclusion from gross income as return of premiums.
Exclusive Conjugal
Funeral expenses
Actual (60% x 100,000) 60,000
Limit (5% x 3,780,000) 189,000 60,000
Judicial expenses (120,000 - 50,000) 70,000
Loss on jewelry through theft 50,000
Gambling debts 70,000
Claims against an insolvent debtor - 60,000
Total 120,000 190,000
Total ordinary deductions 310,000
TOP: VAT
24. ANS: C
SOL:
Interest income from Peso bank deposit = 10,000 x 20% = 2,000
TOP: VAT
25. ANS: A
SOL:
Gross sales 2,000,000
Less: Sales discount (500,000 - 100,000) 400,000
Net sales 1,600,000
Less: Cost of sales
Beginning inventory 100,000
Add: Purchases 400,000
Goods available for sale 500,000
Less: Ending inventory 300,000 200,000
Gross income 1,400,000
Other income
Short tem capital gain 40,000
Long term capital loss (12,500) 27,500
Total gross income 1,427,500
Less: Operating expenses (100,000 + 200,000
100,000)
Taxable income, this quarter 1,227,500
TOP: VAT
26. ANS: A
SOL:
Personal properties (2,000,000 - 500,000 + 50,000) 1,550,000
Real properties 2,000,000
Gross estate 3,550,000
Funeral expenses
Actual (200,000)
Limit (5% x 3,550,000) = 177,500 177,500
Claims against an insolvent person 50,000
Transfer mortis causa to Manila 20,000
Other deductions (900,000 - 200,000 - 50,000 - 600,000) 50,000
Total 297,500
TOP: VAT
30. ANS: C
SOL:
Gross sales 5,000,000
Less: Sales return and allowances 100,000
Net sales 4,900,000
TOP: VAT
31. ANS: B
SOL:
Gross receipts from transport of passengers from Manila to Albay 1,000,000
Gross receipts from transport of goods from Manila to Cebu 1,500,000
Gross receipts 2,500,000
Tax rate 12%
VAT 300,000
TOP: VAT
32. ANS: B
SOL:
Gross receipts from transport of passengers from Manila to Albay 1,000,000
Tax rate 3%
VAT 30,000
Income can be reported in installment because it involves a sale by a dealer of a personal property.
TOP: VAT
44. ANS: A
SOL:
Claim against an insolvent person (fully uncollectible) 500,000
Claim against an insolvent person (20% collectible) (80% x 100,000) 80,000
Total 580,000
TOP: VAT
48. ANS: A
SOL:
Investments 4,000,000
Vehicle 6,000,000
Family home 10,000,000
Piece of Land 15,000,000
Gross estate 35,000,000
Input taxes
VAT on supplies (100,000 x 12%) 12,000
VAT on office computers (150,000 x 12%) 18,000
VAT on rent (100,000 x 12%) 12,000
Total 42,000
VAT payable
Output VAT 312,000
Less: Input taxes 42,000
Total ordinary deductions 270,000
TOP: VAT