1.

Pedro, a resident of Isabela Province had the following data for taxable year 2018: (exchange
rate $1 – P 40)
Philippines Abroad
Salaries 165,000
Business income 450,000 6,000
Business expenses 120,000 1,500
Interest income:
Personal receivable 10,000
FCDU $ 2,500
On bank deposit (20% long term) 25,000 3,000
Royalty income (20% from books) 22,000 1,000
Prize won in contest 10,000
Winnings from PCSO 80,000
Sales of shares of stocks of a domestic corp.
directly to the buyer (cost P 10,000) 30,000

Additional information:

Pedro received the following dividend income during the taxable year:

 P 70,000 from a domestic corp. 30% of its income is attributed to its operations
abroad.
 P 60,000 from a resident foreign corporation. The ratio of its gross income in the
Philippines over worldwide income for the past three years is only 40%.
 P 80,000 from a non – resident foreign corporation. The ratio of its gross income
in the Philippines over worldwide income for the past three years is 10%.

Pedro is married with the following dependents:

 Ana, 23 years old, disabled
 Ron, who turned 21 years old on January 1, 2015.
 Lebron, 28 years old. He was retrenched by his employer.
 Lorna, a college student, living in Manila.

He also sold a condominium unit in Manila (residential) for P 2M although its FMV is P
3,000,000 but with a zonal value of P 4M.

Requirement:
1. The taxable income of Pedro is? 995,000
2. Pedro’s final tax on his passive income is? 45,960
3. If he is a non – resident citizen his final tax on passive income is? P 30,960
4. The total amount of capital gains tax? P 243,000
5. If he is a non – resident alien not engaged in trade or business his total combined taxes
on all income from Philippines is (excluding business income) is? P 337,250
 RC NRC NRANETB
Salaries 165,000 165,000 165,000
Business income 690,000 450,000 -
Business expenses (180,000) (120,000) -
Personal receivable 10,000 10,000 10,000
Interest income – 120,000 - -
bank deposit abroad
Royalty income - 40,000 - -
abroad
Prizes 10,000 10,000 10,000
Dividends – FC 60,000 - -
Dividends – NRFC 80,000 - -
Taxable income 995,000

Passive:
FCDU 100,000 x 15% exempt exempt
= 15,000
Short term deposit 20,000 x 20% 4,000 20,000
= 4,000
Royalty income from 22,000 x 20% 440 22,000
books; x 10% = 440;
Royalty income not 22,000 x 80% 3,520
from books x 20% = 3,520
PCSO Winnings 80,000 x 20% 16,000 80,000
= 16,000
Dividends 70,000 x 10% 7,000 70,000
= 7,000
Total 45,960 30,960 377,000 x
25% =
94,250

Capital gains:
Domestic shares 15% x 20,000 3,000 3,000
= 3,000
Real properties 4M x 6% = 240,000 240,000
240,000

2. Mr. and Mrs. Dela Cruz, both CPAS and resident of the Philippines, with 5 minor children had
the following data for taxable year 2018.
Salaries, wife P 1,200,000
13 month pay and other bonuses, wife
th
140,000
Professional fees, (net of 5% CWT) 1,710,000
Expenses – practice of profession (15% nondeductible) 800,000
 Rental income (net of 5% WT) 190,000
Rental expenses 80,000
Other income, husband (20% non – taxable) 80,000

The taxable income of Mr. dela Cruz is:

The taxable income of Mrs. Dela Cruz is

Mr. Dela Cruz Mrs. Dela Cruz

Salaries 1,200,000
13th month pay and other 50,000
Professional fees 900,000 900,000
Expenses (340,000) (340,000)
Rental income 100,000 100,000
Rental expenses (40,000) (40,000)
Other income 64,000
Taxable income 684,000 1,870,000

Income Tax due: 101,000 451,000

CWT (1.8M x 5%/2) (45,000) (45,000)
CWT (200T x 5%/2) (5,000) (5,000)
Payable 51,000 401,000

3. Juan is a mixed income earner. He is a self – employed resident citizen and currently the
Finance Manager of Omega Corporation. The following data were provided for 2018 taxable
year:
Compensation income 1,800,000
Sales 2,800,000
Cost of sales 1,125,000
Business expenses 650,000
Interest income from peso bank deposit 80,000
Interest income from bank deposit under FCDS 120,000
Gain in sale of land in the Philippines held as capital asset
With cost of P 1.5M when the zonal value is P 1.2M 500,000

How much is the income tax expense assuming he opted to be taxed at 8%?

Compensation (Sec. 24A) 1,800,000

Tax due: 430,000

Business income (8%)

Sales 2,800,000
X 8%
 Tax due 224,000

Passive:
80T x 20% = 16,000
120T x 15% = 18,000
FWT = 34,000

CGT: 2,000,000 x 6% = 120,000

Total income tax expense 808,000

4. GI Joe, an alien employed in Pan Pacific Petroleum, a petroleum service contractor received
compensation income of P 5M in 2018, inclusive of P 400,000, 13th month pay and other
benefits. GI Joe income tax due for the year is:

Compensation income 5,000,000

13th month pay and other benefits (90,000)
Taxable income 4,910,000
Tax due

5. Pedro, single, is a minimum wage earner. In addition to his basic minimum wage of P 180,000
for the year, he also received the following benefits:
 De minimis, P 140,000 (P 80,000 over the ceiling)
 13th month pay and other benefits, P 112,000

How much is the income tax due of Pedro for year 2018?

MWE – exempt from income including the HONH

De Minimis benefits – exempt from income tax

13th month pay and other benefits 112,000

Excess De minimis 80,000
Total 192,000
Exempt (90,000)
Taxable income 102,000

Sec. 24A exempt – 0 ang tax

How much is the income tax due of Pedro if he also earned P 450,000 derived from his business
of buying various consumer products?

Taxable income 102,000

Business income 450,000
Total taxable income 552,000
Sec. 24A

6. Macoy, married with two dependent children, had the following income and expenses for
2019:
Salary, net of withholding tax of P 5,000 P 155,000
13th month pay 5,000
Gross receipts from profession, net of WT of P 7,000 83,000
Rent income, net of 5% withholding tax 57,000
Gross receipts from business 125,000
Professional and business expenses 56,500
Premiums on health insurance 6,000
The income tax payable by Macoy is?

Salary (155,000 + 5,000) 160,000

Gross receipts from profession (83T + 7T) 90,000
Rent income (57,000/95%) 60,000
Gross receipts from business 125,000
Professional and business expenses (56,500)
Taxable income 378,500

Sec. 24A
1st 250,000 0
Excess: 128,500 x 20% 25,700
CWT (7T + 5T + 3T) (15,000)
Payable 10,700
7. Macky and Maui, husband and wife, have the following data in 2018:
Macky Maui
Compensation income P 180,000 P 60,000
Rent income (net of 5% WT) 76,000
Royalties of books 70,000
Interest income of FCDS 20,000
Interest income on deposit substitute 15,000
Dividend income from domestic corp. 20,000
Withholding tax on compensation 10,000

During the year, the spouses had an income of P 120,000 and expenses of P 65,000 which cannot
be identified as solely earned by the wife or the husband.

How much is the income tax due?

Macky Maui
Compensation 180,000 60,000
Rent income 80,000
Income of spouses 27,500 27,500
Taxable income 287,500 87,500
Tax due: 7,500 0
CWT (14,000)
Tax payable 0

8. Mr. Mar Bautista, an employee of Fortune Corporation is receiving a monthly salary (net of
10% withholding tax) of P 18,000. Due to an outstanding accomplishment in July 2018, the
corporation gave him 200 shares of stock of the corporation with a par value of P 100 per share
and a fair market value of P 150. The fair value on the date of receipt is P 152 per share. How
much is the income of Mr. Bautista in 2018?

Compensation (20,000 x 12) 240,000

Shares received (200 shares x 150) 30,000
Total income 270,000

9. JESSICA, a self-employed resident citizen provided the following data for 2018:

Sales 2,800,000

Cost of Sales 1,125,000

Business Expenses 650,000

Interest income from peso bank deposit 80,000

 Interest income from bank deposit under FCDS 120,000

Gain on direct sale to buyer of shares of stock  

of a domestic corporation held as capital asset 150,000

Gain on sale of land in the Philippines held as capital asset  

with cost of 1,500,000 when the zonal value is 1,200,000 500,000

How much is the total income tax expense of Jessica assuming she opted to be taxed at
8%?

Active:
Sales 2,800,000
Exemption (250,000)
Taxable income 2,550,000
X 8%
Tax due 204,000

Passive:
Interest income – bank deposit (80T x 20%) 16,000

FCDS (120T x 15%) 18,000

Capital gains:
Stocks (150T x 15%) 22,500
Real property (2M x 6%) 120,000

10. Shekinah received the following income in 2018:

Business income, Philippines P 300,000
Business income, USA 250,000
Expenses, Philippines 200,000
Expenses, USA 125,000
Interest on deposit with Metrobank 3,000
Interest on deposit in USA (1$= P 40) $ 500
Cash prize won in a local contest P 6,000
Cash prize won in a contest in USA 10,000
Winnings in Lotto Phil 20,000
Winnings in Lotto in USA 50,000
Dividends from SMC, a Domestic Company 25,000

How much is the taxable income?