INCTAX a

Distance Learning Activity_3

SOURCE: RR3-98

1. a. 10,000.00
b. 10,000.00
c. (10,000/65%)x35% 5,385.00

Dr Cr
d. FB expense 10,000.00
FB tax expense 5,385.00
Cash 15,385.00

2.
a. 68,000.00
b. 34,000.00
c. (34,000/65%)x35% 18,308.00

Dr Cr
d. FB expense 68,000.00
FB Tax expense 18,308.00
Cash 86,308.00

3. a. (10M/20yrs) 500,000.00
b. (10M/20yrs)x50% 250,000.00
c. zero
d. [(250T/4qtrs)/65%]x35% 33,654.00

4. a. (10M/20yrs) 500,000.00
b. (10M/20yrs)x50% 250,000.00

c. (3M/15yrs/4quarters) 50,000.00

d. [(250T/4qtrs)/65%]x35% 33,654.00

5. a. Higher than FV 5,000,000.00

b. 5,000,000.00
c. (5M/65%)x35% 2,692,308.00

6. (400,000/65%)x35% 215,385.00
7. Gross salary 960,000.00
Profit sharing incentive 50,000.00
Rice allowance 30,000.00
Uniform allowance 6,000.00
Monetized unused sick leave (5 days) 17,500.00
Monetized unused vacation (5 days) 17,500.00
13th month pay 80,000.00
Additional Christmas bonus 40,000.00
House rental 180,000.00
value of use of car (1M/5yrs) 200,000.00
TOTAL REMUNERATIONS AND BENEFITS 1,581,000.00
LESS: Value of fringe benefits
House rental 180,000.00
value of use of car (1M/5yrs) 200,000.00
excess de minimis treated as FB:
rice 6,000.00
sick leave 17,500.00
TOTAL GROSS COMPENSATION 1,177,500.00
LESS: Non-taxable
mandatory contrib 36,000.00
de minimis limit
rice 24,000.00
uniform 6,000.00
VL 17,500.00
13th month & OB limit 90,000.00 173,500.00
TAXABLE COMPENSATION 1,004,000.00

excess de minimis treated as FB 23,500.00

rental of house 180,000.00
use of car (1M/5yrs) 200,000.00
VALUE of FB 403,500.00

excess de minimis treated as FB 23,500.00

rental of house - 50% 90,000.00
use of car [(1M/5yrs)x50%] 100,000.00
MONETARY VALUE 213,500.00
Divide 65%
Multiply 35%
FB TAX 114,962.00
taken up as depreciation expense

Only the 3M difference between the FV and cost is taken up as fringe benefit
and the basis is the remaining useful life. The remaining value is taken up as
depreciation expense.
Note that in the computation of TAX, the basis is still the MONETARY VALUE
and not the value of the fringe benefit.

Ownership transferred to employee.

Since ownership has been given to the employee, the whole amount is fringe
benefit regardless of its use.
(a)

(B)
( C) taxable compensation is subject to regular income tax

(D)

(e )

(F)