P10.4.

Lester received an assessment from the BIR amounting to P250,000 including interest of
P50,000 due to non-payment of stock transaction tax. He also received a P125,000
assessment from the City or Mandaluyong due to under payment of various local business
taxes
The amount is Inclusive of P25,000 interest. During the year, however, he earned P100,000
interest income from his various bank deposits.
Required: Determine the deductible interest of Lester. – 25,000

P10.5.
On July 1, 2021, a taxpayer obtained a P6,000,000 loan from a bank with annual interest rate
of 12%. The proceeds of the loan amounted to P5.280.000 net of interest. Answer the
questions under the following independent cases:
1. Assume the taxpayer is a resident citizen (under cash basis) and the loan including the
interest is payable on June 30, 2022. How much is the deductible interest expense in 2021
and 2022? – 2021:0 2022:6M-5,800,000=720,000
2. How much is the correct interest expense for 2021' and 2022 assuming the taxpayer is
a resident citizen (under cash basis) and the loan is payable on installment as follows;
P1,500,000 on September 30, 2021, December 31, 2021, March 31, 2022 and June 30, 2022.
360,000;360,000
3. Assume the taxpayer is a domestic corporation (under cash basis) and the loan
including the interest is payable on June 30, 2022. How much is the deductible interest
expense in 2021 and 2022? 360,000;360,000