Fringe Benefits/Fringe Benefit Tax

DEFINITION OF TERMS:
a) Fringe benefit – means any good, service or other benefit furnished or granted by an employer in cash
or in kind in addition to basic salaries, to an individual employee (except rank & file).
b) Rank and File Employees – means all employees who are holding neither managerial nor supervisory
position.
c) Supervisory Employees – are those who in the interest of the employer, effectively recommend such
managerial actions if the exercise of such authority is not merely routinary or clerical in nature but
requires the use of independent judgment.
d) Managerial Employee – is one who is vested with powers or prerogatives to lay down and execute
management policies and/or hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees.
e) Grossed-Up Monetary value – the whole amount of income realized by the employee which includes
the net amount of money or net monetary value of property which has been received plus the amount of
fringe benefit tax due thereon.
f) De Minimis Benefits – facilities or privileges furnished or offered by an employer to his employees that
are of relatively small value and are offered or furnished by the employer merely as a means of
promoting the health, goodwill, contentment or efficiency of his employees.

Imposition of Fringe Benefit tax

a) Fringe benefit tax is a final tax.
b) It is imposed on the grossed up monetary value of fringe benefits furnished, granted or paid by the
employer to employees except rank and file employees.

c) It is imposed whether the employer is:+

1. an individual
2. professional partnership
3. corporation, regardless of whether the corporation is taxable or not, or
4. the government or its instrumentalities.

d. Fringe benefits which are not subject to final tax:

1. When the fringe benefit is required by the nature of or necessary to the trade, business or profession
of the employer; or
2. When the fringe benefit is for the convenience or advantage of the employer.
3. When granted to rank and file employees.

e) The fringe benefit tax shall be treated as a final tax on the employee which shall be withheld and paid by
the employer on a calendar quarter basis.

Tax base and Tax rate

Classification of Taxpayer
RC, RA, NRA-ETB NRA NETB
Monetary value of fringe benefit xxx xxx
Divide by gross monetary value factor 65% 75%
Grossed-up monetary value xxx xxx
X Fringe benefit tax rate 35% 25%
Fringe Benefit tax xxx xxx

Items of fringe benefits subject to final tax:

1. Housing
2. Expense account
3. Vehicle of any kind
4. Household personnel, such as maid, driver and other
5. Interest on loans at less than market rate to the extent of the difference between the market rate
and actual rate granted.
 6. Membership fees, dues and other expenses borne by the employer for the employee in social and
athletic clubs and similar organizations.
7. Expenses of foreign travel
8. Holiday and vacation expenses
9. Educational assistance to the employee or his dependents.
10. Life or health insurance and other nonlife insurance premiums or similar amounts in excess of what
the law allows.

b) Fringe Benefits not Subject to Fringe Benefit Tax

1. Fringe benefits which are authorized and exempted from income tax under the Tax Code or under
any special law;
2. Contributions of the employer for the benefit of the employee to retirement, insurance and
hospitalization benefit plans;
3. Benefits given to rank and file employees, whether granted under a collective bargaining agreement
or not;
4. De minimis benefits
5. If the grant of fringe benefits to the employee is require by the nature of, or necessary to the trade,
business or profession of the employer;
6. if the grant of benefits is for the convenience or advantage of the employer.

Computation of Monetary Value of Benefit

a) Housing privilege
Value of benefit Monetary value of
benefit
1. Employer leases a residential property Amount of rental value 50% of the value
for use of employee paid of benefit

2. Employer owns residential property 5% of market value per tax 50% of the value
assigned to employee declaration or zonal value of benefit
per BIR whichever is higher

3. Employer purchases residential property Annual benefit is 5% of 50% of the value

in installment for use of employee acquisition cost, exclusive of of benefit
interest

4. Employer purchases residential property Employer’s acquisition cost or

and transfers ownership to employee market value per BIR entire value of the
whichever is higher. benefit

5. Employer purchases residential property Difference between the market

and the cost to the employee and transfer value per tax declaration or entire value of
ownership to employee at a price less zonal value per BIR whichever the benefit
than is higher
the employer’s acquisition cost

b) Motor Vehicle:
1. Employer purchases motor
vehicle in the name of employee
2. Employer provides employee
with cash for the purchase of
motor vehicle to be owned by
employee.
3. Employer purchases car on
installment to be owned by
employee.
4. Employer shoulders a portion of
Value of benefit
Acquisition cost
Amount of cash
received by the employee
Acquisition cost exclusive
of interest divided by 5
years
Amount shouldered
Monetary value of benefit
Entire value of
the benefit
Entire value of the benefit
whether vehicle is used
partly for personal and
partly for benefit of
employer.
Entire value of the benefit
whether vehicle is used
partly for personal and
partly for benefit of
employer.
Entire value of the benefit
 the amount of the purchase by employer whether vehicle is used
price of motor vehicle to be partly for personal and
owned by employee partly for benefit of employer

5. Employer owns and maintains a
fleet motor vehicles for use of
the business and employees.
6. Employer leases and maintains
a fleet of motor vehicles for
use of business and employees
7. Use of aircraft including
helicopters owned and
maintained by employer
Acquisition cost of all 50% of the value
motor vehicles not used for of benefit
sales, freight, delivery
services and other non-
personal use divided by 5
years.
Amount of rental payment for 50% of the value
motor vehicles not normally of benefit
used for sales, freight, delivery
services and other non-
personal use.
Treated as a business use and
not subject to fringe benefit tax

8. Use of yacht whether owned Depreciation of yacht at

and maintained or leased by an estimated useful life
employer. of 20 years.

Other Fringe Benefits

a) Expenses accounts
1. Taxable fringe benefits:
a) Expenses incurred by employee but paid by employer
b) Expenses by employees reimbursed by employer.
c) Personal expenses of the employee ( e.g. groceries) paid for or reimbursed by employer.

Notes:
1. Items (a) and (b) are not taxable as fringe benefits when receipted in the name of the
employer and do not partake the nature of personal expense attributable to employee.
2. Item c) is taxable as fringe benefit whether or not receipted in the name of the
employer.

2. Not treated as taxable fringe benefits but taxable as compensation income under Sec. 24.
a. Representation and transportation allowance given regularly on a monthly basis.

b. Household expenses
1. Expenses on employees borne by employer for household personnel such as salaries of:
a) household help
b) personal driver, or
c) other similar personal expenses (e.g. payment for homeowners association dues, garbage dues,
etc.)

c. Interest on loan at less than market value

1. The benchmark is 12% until revised
2. The taxable fringe benefit:
a) interest forgone by the employer or
b) the difference of the interest assumed by the employee and the rate of 12%.

d. Membership dues or fees of employees borne by the employer in social and athletic clubs or other
similar organizations.

e. Expenses for foreign travel of employee paid for by employer.

1. expenses in connection with attending business meeting or convention (except lodging cost in a
hotel) at an average of $300 per day are considered reasonable expenses and shall not be subject
to fringe benefit tax.
2. the cost of economy and business class airplane ticket shall not be subject to fringe benefit tax.
 3. 30% of the cost of first class airplane ticket shall be subject to fringe benefit tax.
4. in the absence of documentary evidence showing that the employee’s travel abroad was in
connection with business meeting or convention , the entire cost of ticket , including cost of
hotel accomodations and other expenses shouldered by employer shall be treated as taxable fringe
benefits.
5. travelling expenses of family members of employees paid for by employer shall be treated as
taxable fringe benefit.

f. Holiday and vacation expenses of the employee borne and paid by his employer shall be treated as
taxable fringe benefit.

g. Educational assistance to employee or his dependents:

1. Cost of educational assistance is treated as taxable fringe benefit.

2. Cost of educational assistance is not treated as taxable fringe benefit.
a. when the study is directly connected with the employer’s trade, business or profession,
b. there is a written contract between the employee and employer that that the former is under
obligation to remain in the employ of the employer for a period of time.
c. when given to employee’s dependents through a competitive scheme under scholarship
program of the company.

h. Life or health insurance and other non-life insurance premiums or similar amounts in excess of what
the law allows.
1. life or health insurance and other non-life insurance premiums are treated as taxable fringe
benefit.
2. the following shall not be treated as taxable fringe benefits:
a) contributions unde SSS law
b) contribution under GSIS law
c) Similar contributions under existing laws
d) Premiums for group insurance of employees

Tax accounting for the Fringe Benefit Furnished to the Employee and the Fringe Benefit Tax Due Thereon.

a. Deductibility of the taxable fringe benefits and of the fringe benefits tax.

Basis of computation of fringe benefit tax Deductible amount from employer’s gross
income

1) General rule Taxable fringe benefits and the fringe benefit tax

2) Depreciation value Actual fringe benefit tax paid

3) Zonal value per BIR Commissioner Actual fringe benefit tax paid

4) FMV per current real property tax Actual fringe benefit tax paid
Declaration

Notes: a) In case 2), 3) and 4), the value of fringe benefit is not deductible because, it is presumed to
have been tacked on or actually claimed as depreciation expense by the employer.

b) If the zonal value in case 3); or the FMV in case 4) of the property is greater than its cost
subject to depreciation, the amortized excess amount shall be allowed as a deduction from
the
employer’s gross income as fringe expense.

FMV/ Zonal Value P 560,000

Depreciable cost 300,000
Excess (to be amortized) P 200,000
 b) Illustrations: Prepare the necessary journal entries. Show supporting computations in good form.

1) During the year 2020, ABC Corporation paid for the monthly rental of a residential house of its
branch manager, Mr. J. de la Cruz, amounting to P65,000.
Debit Credit
Fringe benefit expense 65,000
Fringe benefit tax expense 17,500
Cash 82,500

To record fringe benefit expense and fringe benefit tax on rental of the
residential property furnished to Mr. de la Cruz for his residential use.

Computation:
Value of the benefit P 65,000
Monetary value of the benefit (50% x 65,000) 32,500
Divided by
65%
Gross-up monetary value 50,000
Tax rate
35%
Fringe benefit tax P
17,500

Notes:
1) If employer leases a residential property for use of its employee as usual place residence.
a) the value of the benefit is the amount of rental paid (P65,000).
b) the monetary value is 50% of the value of benefit (P32,500).
2) Fringe benefit expense and fringe benefit tax expense are deductible from the employer’s
gross income.
3) If the fringe benefit and the fringe benefit tax had accrued but not yet paid, the accounts
“Fringe benefit payable” and “Fringe benefit tax payable” are credited instead of “cash”.

2) XYZ Corp. owns a condominium unit. During the year 2020, the said corporation furnished
and granted the said property for the residential use of its Assistant Vice President. The fair
market value of the property per BIR amounts to P 10,000,000 while its fair market value as
shown in its current Real Property Declaration amounts to P 8,000,000.

Debit Credit
Fringe benefit tax expense 11,217.95
Cash/Fringe Benefit tax payable 11,217.95
To record fringe benefit expense and fringe benefit tax on the
residential property furnished to Assistant Vice President. for his residential use.

Computation:
Monthly rental value or property:
(P 10,000,000 times 5% divided by 12 months) …………….……… P 41,667.67

Monetary value of monthly rental (P41,667.67 x 50%) ……

P 20,833.33
Divided by ……………………………… ……………………….. 65% .
32,051.28
Tax rate ……………………………………… …………………… 35% .
Fringe Benefit tax ………………………………………………….. P 11,217.95
 Notes:
1. If the employer owns a residential property and the same is assigned for the use
of its employee as his usual place of business.
a. The annual value of the benefit shall be 5% of zonal value per BIR or market value of
the land and improvement per tax declaration, whichever is higher.
b. The monetary value shall be 50% of the value of the benefit.
c. The “Fringe benefit tax expense” is a deduction from the employer’s gross income.
d. In, general, the employer shall not further claim deduction since the cost for the use of
the residential property has already been recovered as deduction from its gross income
under “Depreciation expense:.

3. Using the same data in Illustration no. 2 ) above and assuming that the acquisition cost of the residential
property is P7,000,000 and the remaining useful life is 15 years.
Debit
Credit
Fringe benefit expense …………………………………………… 16,666.67
Fringe benefit tax ……………………………………………………. 11,217.95
Income constructively realized …………………………………………….. 16,666.67
Cash/Fringe benefit tax payable …………………………………………… 11,217.95

Computation:
a) Computation of fringe benefit tax (see no. 2 above)
b) Computation of fringe benefit expense:

Market value per BIR………………………………………… P 10,000,000

Acquisition cost of residential property …………………. 7,000,000
Excess of Market value …………………………………… P 3,000,000

Yearly amortization: (P 3,000,000 divided by 15 years)………. P 200,000

Monthly amortization: ( P 200,000 divided by 12 months) ….. P 16,666.67

DEALINGS IN PROPERTIES

Dealings in properties involve the sale, exchanges, and other disposition of properties, which may be ordinary
assets or capital assets.

Ordinary assets – are assets used in the business of the taxpayer, such as inventories, supplies and property,
plant
and equipment These includes:
1. Stock in trade (inventories) or other real property of a kind which would be included in inventory of
the taxpayer, if on hand at the close of the taxable year;
2. Real Property held by the taxpayer primarily for sale to customers in the ordinary course of trade or
business
3. Real property or personal property used in the trade or business which is subject to allowance
depreciation
4. Real property used in the trade or business

Note: Real properties acquired by banks through foreclosure sales are considered as their ordinary assets.

Capital Assets - are assets other than ordinary assets. “Capital Assets” means property held by the taxpayer
(whether or not connected with his trade or business), but does not include:

Gains or losses from dealing in Property

 1. Ordinary Gains or loss – refers to gain or losses derived from the sale or exchange of ordinary asset.

2. Capital gain or loss – gains or losses derive from sale or exchange of capital assets.

Net capital gain means, the excess of the gains from sales or exchanges or capital assets over the losses
from such sales or exchanges.
Capital gains xxx
Less: Capital losses (xxx)
Net capital gain xxx

Net capital loss means the excess of the losses from sales or exchanges of capital assets over the gains
from
such sales or exchanges.
Capital gains xxx
Less: Capital losses (xxx)
Net capital loss (xxx)

3. Determination of Gains and losses in Dealings in Properties:

Selling Price xxx

Less: Tax basis or adjusted basis of the asset disposed of xxx
Gain or loss xxx

Selling Price includes the amount realized from the sale and other disposition of property which shall
include:
a) The sum of money received
b) Fair value of non-cash property received.

Tax basis – refers to the cost, carrying amount or depreciated cost of an asset.

Tax Treatment of Ordinary Gains and Losses/Captal Gains and Losses

1. Ordinary Gains are separate item of gross income subject to regular income tax and is taxable in full.

2. Ordinary losses are items of deductions from gross income and deductible in full.

3. Capital Losses are deductible only to the extent of capital gains from dealings in capital assets other than
domestic shares and real properties.

4. Net capital gain – is an item of gross income subject to regular income tax.

5. Net capital loss – is not an item of deduction against gross income.

Determination of Net capital gain or net capital loss

a. For Individual Taxpayers:
1. The holding period rule:
a) Holding period is the length of time the asset was held by the taxpayer. It covers the period from
the date of acquisition to the date of sale.

b) If the capital asset is held by the taxpayer for a period of:

1. Not more than 1 year ( short term holding period) - 100% of the capital gain or loss is
recognized
2. More than one year ( long-term holding period) - 50% of the capital gain or loss is recognized.

2. Capital Losses are deductible only to the extent of capital gains from dealings in capital assets other than
 domestic shares and real properties; hence, net capital loss is not deductible.

3. Ordinary losses are deductible from capital gains but net capital loss cannot be deducted from ordinary
gain

4. “Net capital carry over” is recognized on the following conditions:

 Net capital loss in a taxable year does not exceed the net income before exemptions for such year.
 Such net capital loss may be deducted from the net capital gains of the next taxable year.

b) For corporate taxpayer

 Regardless of the length of the holding period – 100% of the capital gain or loss is recognized.
The holding period does not apply to corporations.

b. To illustrate:
1. Art, an individual taxpayer, reported the following in 2020 and 2021:

2020 2021
Net income before dealings in properties P 370,000 P 400,000
Dealings in ordinary assets
Ordinary gains P 140,000 P 130,000
Ordinary losses (180,000) ( 150,000)
Dealings in capital assets
Capital gains (short term) P 120,000 P 180,000
Capital gain (long term) 50,000 40,000
Capital losses (t term) (160,000) (130,000)

Solution:

2020 2021
Net income before dealings in properties P 370,000 P 400,000
Dealings in ordinary assets
Ordinary gains P 140,000 P 130,000
Ordinary losses (180,000) ( 150,000)
Net income before capital assets P 230,000 P 380,000
Add: net capital gains
Capital gains (short term) P 120,000 P 180,000
Capital gains (long term) (50%) 25,000 20,000
Capital losses (160,000) (130,000)
Net capital gain (loss) ( 15,000) P 70,000
Net income P 230,000 P 450,000

2. If Art is a corporation, the taxable income for 2020 and 2021 would be:

Solution:
2020 2021
Net income before dealings in properties P 370,000 P 400,000
Dealings in ordinary assets
Ordinary gains P 140,000 P 130,000
Ordinary losses (180,000) ( 150,000)
Net income before capital assets P 230,000 P 380,000
Add: net capital gains
Capital gains (short term) P 120,000 P 180,000
Capital gains (long term) 50,000 40,000
Capital losses (160,000) (130,000)
Net capital gain (loss) 10,000 P 90,000
 Net income
1.a. Taxpayer engaged in the
real
estate business
 Real estate dealer
 Real estate developer
 Real estate lessor
 Those habitually engages
in real estate business
b. Taxpayer not engaged in the
real estate business
2. Taxpayer who changed
business from real estate to
non-real estate; or who
amended the Art. of Inc. as
to
primary purpose
3. Taxpayer originally
registered
to be engaged in the real
estate business but failed to
subsequently operate
4. Treatment of abandoned and
idle real properties
5. Treatment of real properties
 transferred through
succession or donation
to heirs or donee
 received as dividend by
stockholder
 transferred in a tax-free
exchange where transferor
is not engaged in real
estate business
P 240,000 P 490,000
Ordinary Asses Capital Asset
All real properties acquires
All properties
- acquired(developed or undeveloped
- held primarily for sale or for lease
- which would properly be included in the
inventory of the taxpayer, if on hand at
the
close of the taxable year;
- used in trade or business (land,
building&
other improvements.)
All real properties( land & other
improvements)
- for lease or being offered for lease/rent
- for use or being used in the trade or
business
All real properties acquired in the course
of trade or business.
Real properties used, being used or have Real properties used by an
been previously used in the trade or exempt corp. in its exempt
business of the taxpayer operations(not considered used
for business purposes)
Shall not result to reclassification of real
property held from ordinary to capital
asset.
All properties orginally acquired shall
continue to be treated as ordinary assets
Real property initially acquired by If taxpayer is engaged in
taxpayer engaged in real estate business business other than real estate,
shall not result in its conversion into a ordinary asset is converted to
capital asset even if the same is capital asset upon proof that it
subsequently abandoned or becomes idle. has not been used in business
for more than 2 years prior to
the consummation of the
taxable transaction.
Heir, donee or stockholder:
- is not engaged in the real
estate
business, and
- does not subsequently use
such
Property in trade or business.
The real property received in exchange
shall be treated as ordinary asset in the
hands of the transferre:
Activity 1:
Exercises Dealings in properties/Fringe Benefits

1. VDA Co. paid P 33,000 to JayJay Resort Co. representing vacation expenses of Dee Guzman, an executive
of
the company, in the year 2020.
Question 1 - Is this a taxable fringe benefit?, How much is the base of the fringe benefit tax?
2 - Should the taxable fringe benefit be included in the returnable (taxable) income of Dee
Guzman for the year 2020?
3 - How much is the final fringe benefit tax?
4 - When is the fringe benefit tax collected?
5. Prepare the journal entry to record in the books of VDA Co.
6 - Assuming Dee Guzman is a rank and file employee, is the fringe benefit subject to fringe
benefit tax?

2. Rider Company made the following payments in the 3 rd quarter of 2020:

Fringe Benefits:
To the Fernando’s Grocery in payment of groceries for the company manager and his family P 16,500
To a University in payment of the tuition fee of the manager ……………………… 24,750
Total ……………………………………………………………………………………… P 41,250

Salary of the manager , net of P 50,000 withholding tax …………………………………….. P 350,000

REQ: Assuming the manager is married and has two qualified dependents, answer the following questions:
a. How much is the fringe benefit tax?
b. When is the remittance of the fringe benefit tax?
c. How much is the manager’s taxable net income in 2020?

3. Gang Co. leased a residential house for the use of its branch manager. The rent per agreement was P 35,000
per
month in 2020:
Question no. 1 - How much is the value of the benefit per month?
2 - How much is the monetary value of the benefit per month for fringe benefit tax
purposes?
3 - How much is the final fringe benefit tax per month?

4. Bitoy Company owns residential property which is assigned to its officer for use. The following data pertain
to the residential property in 2020:
Cost P 5,000,000
Fair market value per BIR 4,500,000
Fair market value per Assessor’s office 3,000,000

Q 1 - How much is the monthly value of the benefit?

2 - How much is the monetary value of the benefit per month for fringe benefit tax purposes?
3 - How much is the fringe benefit tax?

5. Using the same data in no. 4 and assuming that Bitoy Company transferred the ownership of the residential
property in the name of the officer, answer the following:
Q 1 - How much is the annual value of the benefit?
2 - How much is annual the monetary value of the benefit?
3 - How much is the fringe benefit tax?

6. Beloy Company purchased real property in installment and allowed its manager to use the same as his
residence. Installment contract price was P2,000,000 (year 2020).
 Q 1 - How much is the annual value of benefit?
2 - How much is the monetary value of the benefit?
3 - How much is the monthly fringe benefit tax?

7. ADC Co. purchased a residential house at a cost of P2,300,000. The property was transferred by ADC Co.
to its president to be used for residential purposes for P1,980,000. The value per BIR is P2,500,000 while the
Assessor’s value is P2,607,000.
Q 1 - How much is the annual value of the benefit?
2 - How much is the monetary value of the fringe benefit?
3 - How much is the fringe benefit tax?

8. In 2020, Chicks Co. purchased a motor vehicle for the use of its manager. The vehicle was registered in
manager’s name. The cost of the vehicle was P396,000. It is used partly for personal purposes and partly for
the benefit of the company. Compute for the following :
a) Value of the benefit b) Monetary value of the benefit c) Fringe benefit tax

9. Using the same data in no. 8 and assuming that Chicks Co. shouldered only a portion of the cost of the car in
the amount of P132,000 and the balance paid by the manager. Compute the following :
a) Value of the benefit b) Monetary value of the benefit c) Fringe benefit tax

10. Using the same data in no. 8 and assuming that Chicks Co. purchased the car in the name of the manager on
installment basis. Compute the following:
a. Value of the benefit b) Monetary value of the benefit c) Fringe benefit
tax

11. Egram Corp. owns a fleet of motor vehicles for the use of the business and its employees. One of the cars
costing P450,000 is not used for business purposes. Most of the time, it is borrowed by the
employees for personal purposes. Compute the following (year 2020):
a. Value of the benefit b) Monetary value of the benefit c) Fringe benefit tax

12. Olive Co. leases motor vehicles from Rent-a-Veh, Inc. and pays quarterly rental of P41,250 for the vehicle
used
by the employees for personal purposes. Compute the following (year 2020):
a. Value of the benefit b) Monetary value of the benefit c) Fringe benefit
tax

13. Ross, an executive of Near West Bank, was granted a loan by the bank. The amount of the loan was
P2,000,000
at 8% interest per annum. The loan is payable in four months. Compute the following (year 2020):
a. Interest foregone by the bank b) Value of the benefit c) Fringe benefit tax

14. Mr. A, the Vice President for finance of TRY Corporation incurred the following expenses by attending a
three-
day foreign business convention: Plane ticket (USA travel)
First clsss $1,000
Economy 500
Hotel accommodation (USA) 2,700
Inland travel 600

Determine the fringe benefit tax due assuming that the business convention was:
a) With documentary evidence b) without documentary evidence
15: Determine whether the following are capital assets (CA) or ordinary assets (OA) :
1) Accounts receivable
2) Securities held as investment
3) Residential house
4) Jewelry for personal use
5) Interest of a partner in a partnership
6) Securities sold by dealers in securities
7) Merchandise inventory, end
8) Raw materials inventory, end
9) Work in process inventory, end
10) Apartment house
11) Lots sold by subdivision developer
12) Land used in business
13) Jewelry sold by Jewelry store
14) Office equipment

16. Mr. Tano, a self employed resident citizen, single, reported net income before exemption of P 350,000.
He had also the following dealings in properties during the year:

Dealings in properties Holding period Gain (loss)

Ordinary assets
Equipment 18 months P 5,000
Computer 11 months ( 10,000)
Capital Assets
Foreign bonds 6 months 80,000
Domestic bonds 18 months (120,000)
Domestic shares 24 months 60,000
Foreign shares 12 months 50,000
Car not used in business 5 years (100,000)

A. Compute:
Q1. The ordinary gain is: ____________________________

Q2. The ordinary loss is ____________________________

Q3. The capital gain is : ____________________________

Q4. the capital loss is ________________________________

Q5. The net capital gain (loss) ________________________

Q6. Compute the taxable net income of Mr. Tano _____________________

B. Using data in A, but Tano is a corporation:

Q7. The capital gain is : ____________________________

Q8. the capital loss is ________________________________

Q9. The net capital gain (loss) ________________________

Q10. compute the taxable net income of Tano Corporation ______________