A.

For compensation Income earners: (Graduated rates)

a. Effective January 1, 2018:

Over But not over The tax shall be Plus Of excess over
- P 250,000 exempt - -
P 250,000 400,000 20% P 250,000
400,000 800,000 P 30,000 25% 400,000
800,000 2,000,000 130,000 30% 800,000
2,000,000 8,000,000 490,000 32% 2,000,000 b. Effective
8,000,000 -- 2,410,000 35% 8,000,000 January 1,
2023:
Over But not over The tax shall be Plus Of excess over
- P 250,000 exempt - -
P 250,000 400,000 15% P 250,000
400,000 800,000 P 22,500 20% 400,000
800,000 2,000,000 102,500 25% 800,000
2,000,000 8,000,000 402,500 30% 2,000,000
8,000,000 -- 2,202,500 35% 8,000,000

Tory Reyes is single, employed in DRY Corporation and is also a part-time real estate agent for a real estate
broker. In addition to the compensation (net of SSS, Philhealth and Pag ibig contributions ) of P 480,000 she
received from her employer, she likewise received P 75,000 as commission from her real estate dealings for
the year 2019.

How much is the income tax due, if she is under the 8% income tax regime? __________________

John Smith, alien employed by Global Petroleum, a Petroleum Service Contractor, received a
compensation income of P 3,500,000 in 2020 inclusive of P 450,000 13 th month pay and other benefits.

John Smith’s income tax due for the year is

Assignment 3 – Practice. Use Yellow pad for supporting computations.

For items 1 – 10: Determine the income tax due and payable: (source: income taxation by Tabag, E. & Garcisa, EJ.)

1. Dante is a resident citizen, earning purely compensation income. Determine the tax due and payable for taxable
Year 2020 if the gross compensation income, net of SSS, Philhealth an Pagibig contributions is:
a) P 245,000
b) P 755, 350
c) P 2,650,455

A) EXEMPT

B) Tax Due
1st p400,000 = P30,000
Excess over 400,000 (355,350 x 25% ) = P88,837
Total P118,837.5

C) Tax Due
1st P2,000,000 = P490,000
Excess over 2,000,000 (650,455 x 32% ) = P208,145.6
Total P698,145.6

2. Jack is resident citizen earning purely business income for taxable year 2020:
 Gross sales 2,800,000
Cost of Sales 1,200,000
Operating expenses 650,000
Creditable withholding taxes 80,000

Computation:
Gross sales P 2,800,000
Cost of sales P 1,200,000
Operating expenses P 650,000
Taxable net income P 950,000

Tax Due
1st 800,000 P 130,000
Excess over 800,000 ( 150,000 x 30% ) P 45,000
Tax Due P 175,000
Less: CWT P 80,000
Income Tax Payable P 95,000

3. Use the same data in # 2: except that Jack opted to be taxed using 8% tax rate.

Answer:
Gross sales P 2,800,000
Less 250,000
Balance subject to 8% tax 2,550,000
8%
Tax due 204,000
Less: CWT 80,000
Income tax payable P 124,000

4. Using the same data in # 2: except that Jack is a VAT registered taxpayer:

5. Brien is resident citizen earning purely business income for taxable year 2020:
Gross sales 2,800,000
Cost of Sales 1,200,000
Operating Expenses 650,000
Rental income ( net of 5% CWT) 380,000
Expenses – rental property 150,000
Other creditable withholding taxes 80,000

Answer:

6. Using the same data no. 5: Can Brien choose to be taxed at 8%? If yes, how much is the tax still due and
payable for the year?

7. Teddy is a practicing professional with the following data for the taxable year 2020:
Gross receipts 4,000,000
Cost of direct services 1,800,000
Other operating expenses 825,000

8. Using the same data no. 6: Can Teddy choose to be taxed at 8%? If yes, how much is the tax still due and
payable for the year?

9. Renee is resident citizen, earning compensation and business income for the taxable year 2020:
Compensation income 1,400,000
Gross sales 2,800,000
Cost of Sales 1,200,000
Operating Expenses 650,000
 Withholding tax on compensation income 310,000
Other Creditable withholding taxes 80,000

Answer:
Compensation Income 1,400,000
Gross sales 2,800,000
Less: Cost of sales 1,200,000
Operating expenses 650,000 1,850,000
Taxable net income 2,350,000
Tax Due:
1st 2,000,000 490,000
Excess over 2,000,000 = (350,000x32%) 112,000
Tax due 602,000
Less: CWT on
On compensation income 310,000
Other CWT 80,000
Income tax Payable 212,000

10. Using the same data no. 9: Can Brien choose to be taxed at 8%? If yes, how much is the tax still due and
payable for the year?

For items 11 and 12:

, Tory Reyes is single, employed in DRY Corporation and is also a part-time real estate agent for a real estate
broker. In addition to the compensation (net of SSS, Philhealth and Pag ibig contributions ) of P 480,000 she
received from her employer, she likewise received P 75,000 as commission from her real estate dealings for
the year 2019.

11. How much is the income tax due, if she is under the graduated income tax regime? _____________

12. How much is the income tax due, if she is under the 8% income tax regime? __________________

13. Dan married to Mary had the following during the taxable year 2019:
Gross Income:
From the practice of profession P 700,000
Rental income of their conjugal property 300,000
Allowable deductions:
For the practice of profession 520,000
For the property rented to tenants 140,000

If Dan opted the graduated tax rate, the taxable income is:
a) P 340,000 b) P 260,000 c) P 180,000 d) P 170,000

14. Freddie, a resident citizen, married, with two dependent children, received the following income:
Business income, Philippines P 1,000,000
Business income, Singapore 500,000
Interest on peso deposit, BDO 50,000
Interest on US$ deposit, BDO ($1,000 x P 54) 54,000
Interest bank deposit in Singapore 120,000
Dividend from domestic corporation 250,000
Prize (TV) won in a local lottery 20,000
PCSO/lotto winnings 150,000
Dividend from foreign corporation 50,000

The total final tax is _________________________

15. Refer to no. 14, except that Freddie is a non-resident citizen, the total final tax is ____________
16. Christian, a resident citizen provided the following data for the taxable year 2019:

Gross receipts from profession (gross of P 62,000 CWT) 2,450,000

Cost of direct services 850,000
Other operating expenses 300,000
Royalty from books 60,000
Interest income from savings deposit, BPI 15,000
Interest income from customer’s notes receivable 6,000
Gain on sale direct to the buyer of shares of stock of a domestic corporation 50,000
Gain on sale of direct to the buyer of shares of stock of a foreign corporation 60,000
Loss on sale of land in the Philippines held as capital asset with cost of P 400,000, 50,000
zonal value P 200,000

The income payable still due and of Christian __________________________

17. refer to # 16 the total final tax and capital gain tax on shares of stock and real properties ____________

18. Philip, married left the Philippines on July 1, 2019 to go and work in Canada for 5 years. The following data
were provided as of December 31, 2019:

Gross Business Income Business Expenses

Philippines Abroad Philippines Abroad
January 1 to June 30. 2019 P 500,000 600,000 P 350,000 P 475,000
July 1 to December 31, 800,000 500,000 650,000 345.000
2019

His taxable income is: __________________________

A taxpayer had the following data for the taxable year 2019: (Exchange rate $1 = P 50)
Philippines Abroad
Gross receipts from profession 2,400,000 $50,000
Salaries earned 250,000 --
Cost of direct services & other operating expenses 1,150,000 20,000

19. If the taxpayer is a resident citizen, the taxable income is _____________________

20. If the taxpayer is a resident alien, the taxable income is _______________________

21. If the taxpayer is a non-resident alien not engaged in trade or business, disregarding the professional data,
total income tax that should be withheld from his income is ____________________.

22. Antonio, single, is a minimum wage earner of TGD Corporation In addition to the minimum wage of P 150,000
for the year 2019, also received the following:
Overtime pay 25,000
Night shift differential 20,000
Hazard pay 24,000
13th month pay & other benefits 60,000

The income subject to tax is _________________________

23. On December 15, 2019, Ryan sold the following shares of stock of a domestic corporations which he bought
for investment purposes:
Listed and traded Not listed and traded
Selling price P 250,000 P 143,680
Selling expenses 12,000 3,680
Cost 118,000 80,000

The capital gain tax is ___________________

24, Refer to No. 23: assume that Ryan is a dealer in securities, the capital gain tax is ___________________

25. Refer No. 23, assume that the shares sold are shares issued by foreign corporation, the capital gain tax
_________________

26. On August 15, 2019, M. Perez sold a 600 square meter residential land for P 1,000,000. The land was
acquired in 2013 for P 500,000. On the date of sale, the fair market value shown in the real property declaration
is P 500,000 and the assessed value amounted to P 200,000. The Zonal value is P 1,500 per square meter.

The capital gain tax is: ________________________

27. Martin, a resident citizen, owns apartment units with a monthly rental of P 8,000 per unit. On December 20,
he
sold the property Carl, a resident alien taxpayer. The sale shall be subject to:

a) 6% capital gain tax

b) Regular/basic income tax
c) 6% capital gain tax or basic income tax at the option of Martin
d) 6% capital gain tax or basic income tax at the option of Carl

28. Teddy sold a residential house and lot, his principal residence, for P 4,000,000. Its current fair market value is
P 4,500,000 while the Zonal value of P 3,500,000. Teddy used ¾ of the proceeds to buy a new principal
residence within 18 months after the sale. Teddy properly informed the BIR about the sale. The sale shall be:

a) Exempt from capital gain tax

b) Subject to P 270,000 capital gain tax
c) Subject to P 67,500 capital gain tax
d) Not given (specify)

29. Mr. David owns a videoke bar with gross receipts of P 2,800,000 for the taxable year 2019. His cost of direct
expenses and operating expenses are P 1,200,000 and P 800,000, respectively and with non- operating
income of P 100,000.

Which of the following statement is correct?

a) Mr. David has no option to avail the 8% income tax rate.

b) Mr. David’s income tax shall be computed using the graduated tax rate.
c) Aside from the income tax computed using the graduated rate, Mr. David is still liable for business tax
the Amusement tax under Sec. 125 of the Tax Code as amended.
d) All of the above

30.Refer to No, 29: Mr. David’s income tax due for the year shall be: ________________
31. A married resident citizen has five qualified dependent children. The following information pertain to his
income and expenses in the year 2020:
Salary, net of P 20,000 withholding tax, SSS, Philhealth & Pagibig
contributions, P 22,525 380,000
Rent expense – apartment house 36,000
Health insurance premiums 5,000
Tuition fee of children 50,000

The tax due is _______________________

32. Resident Filipino taxpayer, married, with two qualified dependents. Data for the year 2020:
Gross Salary from ABC Company P 540,000
13th month pay and other benefits 95,000
SSS, Philhealth, Paig-ibig contributions 25,430
Interest from peso bank deposit, PNB - Manila 10,000

The tax due is _______________________

Mr. Richard David, a citizen of the Philippines married to Mrs. Dee David , had the following data for 2020:
Mr. Mrs. Mr. & Mrs.
Gross income from business P 1 440,000
Gross income from profession P1,400,000
Rent income from land and building , gross of 5%
Withholding tax P 96,000
Dividend from domestic corporation 20,000
Interest on notes receivable 4,000 2,000
Interest on Philippine currency bank deposit 6,000 14,000 16,000
Capital gain on sale directly to buyer at P 560,000
Of shares of domestic corporation 160,000
Capital gain on sale directly to buyer at P 4,000,000
of land in the Philippines 600,000
Expenses, business/profession 700,000 640,000
Expenses vs rent income 20,000

33. The capital gain taxes paid and final tax paid on passive income within the year:

34. The income tax still due and payable by Mr. and Mrs. Go:

In 2019, Brian signified his intention to be taxed at 8% income tax rate on gross sales in his 1 st quarter income tax
return and had the following data:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Sales P 800,000 P1,000,000 1,100,000 2,500,000
Cost of Sales 480,000 600,000 650,000 1,300,000
Gross income 320,000 400,000 450,000 1,200,000
Operating expenses 180,000 220,000 250,000 590,000
Net taxable income 140,000 180,000 200,000 610,000

35. The income tax payable for the 1st quarter is ___________________
36. The income tax payable for the 2nd quarter is ____________________
37. The income tax payable for the 3rd quarter is ____________________
38. The income tax payable for the year 2019 is: _____________________
39. The total business tax payable due for the year is ______________________

40. John Smith, alien employed by Global Petroleum, a Petroleum Service Contractor, received a
compensation income of P 3,500,000 in 2020 inclusive of P 450,000 13 th month pay and other benefits.

John Smith’s income tax due for the year is _________ ___________
End