Problem 1

Gross Sales 1,490,000.00

Cost of Sales
Other non operating income 200,000.00
Itemized Deductions
Exempt Income 250,000.00
Taxable Income 1,440,000.00
Tax Rate 8%
Tax Due 115,200.00 TWO
Creditable Taxes Withheld 15,000.00
Tax Payable 100,200.00 TWO

Gross Sales 1,490,000.00

Cost of Sales
Other non operating income 200,000.00
Itemized Deductions
Exempt Income
Taxable Income 1,690,000.00
Tax Rate 8%
Tax Due 135,200.00 THREE
Creditable Taxes Withheld 15,000.00
Tax Payable 120,200.00 THREE

Sales Other income

1st quarter 1,490,000.00 200,000.00
2nd Quarter 1,000,000.00
3rd Quarter 300,000.00
October 200,000.00
November 800,000.00 150,000.00
December 150,000.00
Total 3,940,000.00 350,000.00

TOTAL SALES 3,940,000.00

Cost of sales 1,350,000.00
Other income 350,000.00
Itemized Deductions 940,000.00
Taxable Income 2,000,000.00
Income tax Due
1st 800k 130,000.00
excess in 800k 360,000.00
Tax Due 490,000.00 FIVE
CWT 42,000.00
Tax paid for 3 quarters 182,000.00
Tax Payable 266,000.00 FIVE
FOUR SAME ANSWER

FOUR SAME ANSWER

Itemized
Cost of sales Deductions CWT
500,000.00 300,000.00 15,000.00
350,000.00 210,000.00 10,000.00
175,000.00 140,000.00 5,000.00
50,000.00 45,000.00 2,500.00
230,000.00 205,000.00 8,000.00
45,000.00 40,000.00 1,500.00
1,350,000.00 940,000.00 42,000.00

2,700,000.00
200,000.00
250,000.00
2,650,000.00
0.08
212,000.00
30,000.00
182,000.00
Problem 2
Exempt De Minimis
SSS, PAGIBIG, Philhealth 102,000.00 102,000
Union Dues 60,000.00 60,000
Rice Allowance 24,000.00 24,000.00
Employee Cash Achievement
Award 10,000.00
Christmas Bonus 90,000.00 5,000.00
Productivity Bonus 80,000.00 10,000.00
Medical Cash Allowance to
Dependents 3,000.00 3,000.00
Monetized SL credits (rate of
P1,000 per day) 10,000.00
Monetized VL credits (same
rate) 15,000.00 10,000.00
Uniform Allowance given in cash
6,000.00 6,000.00
13th and 14th month pay 80,000.00
Actual medical assistance 10,000.00 10,000.00
Total ###
Not subject to income tax 162,000.00 68,000.00

INCOME 3,500,000.00
SSS, PAGIBIG, Philhealth 102,000.00
Union Dues 60,000.00
TAXABLE OTHER BENEFITS 170,000.00
Total Taxable Income 3,508,000.00 SEVEN

Lancelot share
Gain on sale of car 50,000.00 25,000.00
Rental Income 1,000,000.00 500,000.00
Additional Taxable Income 525,000.00 EIGHT

Housing Benefit
Fair market value 1,000,000.00
Shouldered by employee 600,000.00
Value of benefit 400,000.00
Gross up rate 65%
615,384.62
FBT rate 35%
215,385 NINE
Other Benefits

10,000.00 Note should be given in cash

85,000.00
70,000.00

10,000.00

5,000.00

80,000.00

260,000.00
90,000.00 320,000.00 SIX
170,000.00
PROBLEM 3
Regular Income tax
Compensation Income 1,300,000.00
Business Income, Philippines 2,000,000.00
Business Income, abroad Outside
Business Expenses, Philippines (1,300,000.00)
Business Expenses, abroad Outside
Dividend income, domestic corporation FWT
Dividend income, NRFC Outside
Interest income, BPI Manila branch FWT
Interest income, BPI New York branch Outside
Interest income, BPI Manila branch, FCDU FWT
Household expenses Non-Deductible
Taxable Income 2,000,000.00
Income tax Due
1st 800k 130,000.00
excess in 800k 360,000.00
Tax Due 490,000.00
CWT 200,000.00
TAX WITHHELD ON COMPENSATION 220,000.00
TAX PAYABLE 70,000.00 TEN

CAPITAL GAINS TAX

House and Lot Per Tax Dec Per BIR
House 600,000.00 600,000.00
Land 800,000.00 1,000,000.00
FMV 1,400,000.00 1,600,000.00

FMV, 1,600,000.00
Selling Price 1,750,000.00 (250,000 gain + 1,500,000 cost)

Whichever is higher 1,750,000.00

CGT rate 0.06
CGT due 105,000.00 105,000.00

Shares of stock
Gain 100,000.00
Cost 40,000.00
Selling Price 140,000.00

Fair Market Value

Net Assets per books 15,000,000.00
Adjustment for FMV of land 500,000.00
Fair Market Value of Net Assets 15,500,000.00
Outstanding shares 1,000,000.00
Book Value per share as adjusted 15.50
Number of shares sold 10,000.00
FMV of shares sold 155,000.00

Whichever is higher 155,000.00

Cost (40,000.00)
Capital Gain 115,000.00
CGT rate 15%
CGT due 17,250.00 17,250.00

TOTAL CGT DUE 122,250.00 ELEVEN

PRINCIPAL RESIDENCE

Selling Price 1,750,000.00

Utilized Portion 1,487,500.00
Unutilized 262,500.00

Percentage of Unitilized Portion 15.00%

CGT Base (whichever is higher) 1,750,000.00
Taxable Portion 262,500.00
CGT rate 6%
CGT due 15,750.00 TWELVE

18 months ago - same. Rule on holding period does not apply to sale subject to CGT

122,250.00 THIRTEEN
1,500,000 cost)
RESIDENT CITIZEN/RESIDENT ALIEN
Tax Rate
Royalty income from copyright 2,200,000.00 0.10 220,000.00
Royalty income from trademarks 550,000.00 0.20 110,000.00
Raffle draw winnings 10,000.00 0.20 2,000.00
Philippine lottery winnings 150,000.00 0.20 30,000.00
Dividend income from domestic corporation 10,000.00 0.10 1,000.00
Dividend income from foreign corporation* 15,000.00 - Regular Income Tax
Interest income from FCDU of PNB 20,000.00 0.15 3,000.00
Interest income on peso deposits in Maybank 10,000.00 0.20 2,000.00
Total FWT Due 368,000.00 FOURTEEN

NON-RESIDENT CITIZEN
Tax Rate
Royalty income from copyright 2,200,000.00 0.10 220,000.00
Royalty income from trademarks 550,000.00 0.20 110,000.00
Raffle draw winnings 10,000.00 0.20 2,000.00
Philippine lottery winnings 150,000.00 0.20 30,000.00
Dividend income from domestic corporation 10,000.00 0.10 1,000.00
Dividend income from foreign corporation* 15,000.00 - Regular Income Tax
Interest income from FCDU of PNB 20,000.00 - Exempt
Interest income on peso deposits in Maybank 10,000.00 0.20 2,000.00
Total FWT Due 365,000.00 FOURTEEN

NON-RESIDENT ALIEN ENGAGED IN TRADE OR BUSINESS

Tax Rate
Royalty income from copyright 2,200,000.00 0.10 220,000.00
Royalty income from trademarks 550,000.00 0.20 110,000.00
Raffle draw winnings 10,000.00 0.20 2,000.00
Philippine lottery winnings 150,000.00 Exempt
Dividend income from domestic corporation 10,000.00 0.20 2,000.00
Dividend income from foreign corporation* 15,000.00 - Regular Income Tax
Interest income from FCDU of PNB 20,000.00 - Exempt
Interest income on peso deposits in Maybank 10,000.00 0.20 2,000.00
Total FWT Due 336,000.00 FOURTEEN

NON-RESIDENT ALIEN NOT ENGAGED IN TRADE OR BUSINESS

TAXABLE
Royalty income from copyright 2,200,000.00 2,200,000.00
Royalty income from trademarks 550,000.00 550,000.00
Raffle draw winnings 10,000.00 10,000.00
Philippine lottery winnings 150,000.00 150,000.00 Exempt
Dividend income from domestic corporation 10,000.00 10,000.00
Dividend income from foreign corporation* 15,000.00 11,250.00 75% WITHIN
Interest income from FCDU of PNB 20,000.00 Exempt
Interest income on peso deposits in Maybank 10,000.00 10,000.00
Total FWT Due 2,941,250.00
TAX RATE 25%
735,312.50 FOURTEEN
Regular Income Tax

FOURTEEN

Regular Income Tax

FOURTEEN

Regular Income Tax

FOURTEEN
75% WITHIN

FOURTEEN
INCOME TAX DUE AND PAYABLE
Gross Sales
Cost of Sales
Gross Income from Sales
Other Non-Operating Income
Interest from receivables
Interest from peso deposits
Interest income on US dollar deposits (100,000 from BPI US
Branch)

Gain on sale of land (cost P2,500,000; FMV 2,800,000)

Gain on sale of shares of stock (cost P2,300,000)
Dividend income (100,000 from domestic corporation; 300,000 from resident foreign corporation)

Rental Income (gross of 5% withholding tax)

Total Gross Income

Deductible Expenses
Depreciation Expense
Loss on sale of building held as capital asset (cost is P1,200,000; FMV 1,100,000)

Provision for bad debts (net of P500,000 written-off)

Taxes and Licenses

Interest Expense
Contributions to Retirement Fund
Senior Citizen Discounts
Impairment Loss
Loss from fire (carrying amount of the machinery)

Selling and Admin Expenses

Taxable Income

MCIT Due (2% of Gross Income)

RCIT Due

Whichever is higher
Tax Credits
Income tax payable

Interest Expense
Interest Expense
Tax Arbitrage
Deductible Interest

Taxes and Licenses

Registration and Mayor's Permit
Local Business Tax
Real Property Tax
Capital Gains Tax
Output Value-Added Tax
Deductible Amount

Retirement Expense
Contributions to Retirement
Current Service Cost
Past Service Cost
Amortized over
Amortization for the year
Current Service Cost
Total Deductible Retirement

LAND
Selling Price
FMV

Whichever is higher
Tax Rate

BUILDING
Selling Price
FMV

Whichever is higher
Tax Rate

SHARES OF STOCK
Gain
Tax Rate
Total CGT Due

FINAL TAX
Interest on Peso Deposits
Total FWT
RCIT
MCIT

Whichever is higher
 20,000,000.00
(4,000,000.00)
16,000,000.00

400,000.00
FWT

100,000.00 Only from BPI US

CGT
CGT

300,000.00 Only from RFC

700,000.00
1,500,000.00
17,500,000.00

(2,216,000.00)
- Subject to CGT

(500,000.00)
Only written off portion
(2,300,000.00)
(201,000.00)
(2,600,000.00)
(250,000.00)
Non-deductible
(200,000.00)
Net of amount covered by insurance
(6,100,000.00) (14,367,000.00)
3,133,000.00

350,000.00
939,900.00

939,900.00 FIFTEEN
(35,000.00) (Withheld taxes on rental income)
904,900.00 FIFTEEN

300,000.00
 99,000.00 (200,000 interest income subject to 20% final tax * 33%)
201,000.00 SIXTEEN

100,000.00
1,200,000.00
1,000,000.00

2,300,000.00 SEVENTEEN

3,500,000.00
2,500,000.00
1,000,000.00
10.00 years
100,000.00
2,500,000.00
2,600,000.00 EIGHTEEN

CGT DUE

3,000,000.00
2,800,000.00

3,000,000.00
6% 180,000.00

1,000,000.00
1,100,000.00

1,100,000.00
6% 66,000.00

400,000.00
15% 60,000.00
306,000.00 NINETEEN

200,000.00 20% 40,000 TWENTY

250,000.00
200,000.00

250,000.00 TWENTY-ONE
Gross Income 1,000,000.00
Rental Income 460,000.00 Gross of P23,000 withheld taxes
Deductible Expenses (300,000.00)
Taxable Income 1,160,000.00
Tax Rate 0.30
Income Tax Due 348,000.00 TWENTY-TWO
Tax Credits
Quarterly Tax Payments (120,000.00)
CWT on rent (23,000.00)
Tax Payable 205,000.00 TWENTY-TWO

Distributable Income 812,000.00 (P1,160,000 less P348,000 income tax) TWENTY-THREE

Tax Rate
Share of Will 75% 609,000.00 10%
Interest Income from checking 20,000.00 20%
Total FWT

Taxable Income of Will

Gross Income 800,000.00
Expenses (100,000.00)
Salaries 100,000.00
BPE (50,000.00)
Taxable Income 750,000.00 TWENTY-FIVE

Partnership
Gross Income 1,000,000.00
Rental Income 460,000.00
Deductible Expenses (300,000.00)
Taxable Income 1,160,000.00

Distributable Income 1,160,000.00 TWENTY-SIX

Taxable Income of Will

Gross Income 800,000.00
Expenses (100,000.00)
Salaries 100,000.00
Share in GPP income 870,000.00 75% of distributable income
BPE (50,000.00)
Taxable Income 1,620,000.00 TWENTY-SEVEN
60,900
4,000
64,900 TWENTY-FOUR