Quiz - Problem Tax on Individuals

Problem 1
Mr. Braham is currently employed by Acar, Inc. His employment is his only source of income. His
total compensation income in 2018 is P320,000. How much is his income tax liability for 2018?
Employed → Graduated Rate
P320,000 → 20% of excess over P250,000
- P250,000
P70,000 × 20% = P14,000 is his income tax liability

Problem 2
Mr. Braham is currently employed by Acar, Inc. as a minimum wage earner. His employment is his
only source of income. His total compensation income in 2018 is P200,000. How much is his
income tax liability for 2018?
Employed → Graduated Rate
P200,000 → Annual Income lesser than P250,000 have no income tax
liability.

Problem 3
Engr. Cala offers professional consultancy services. For taxable year 2018, her records show a total
gross receipt of P3,850,000, cost of services amounting to P1,900,000 and operating expenses
P800,000. Compute for Engr. Cala’s income tax liability for 2018.
Self-employed → Graduated Rate
Gross Receipt P3,850,000
(less) Cost of Services P1,900,000
Gross Income P1,950,000
(less) Operating Expense P800,000
Net Taxable Income P1,150,000 → P130,000 + 30% of excess over P800,000
- P800,000
P350,000
× 30%
P105,000
+ P130,000
P235,000 is her income tax liability

Problem 4
Dr. Adrina is a renowned medical practitioner. In 2018, her medical practice’s gross receipts
amounted to P5,700,000. Her cost of services and operating expenses were P2,200,000 and
P750,000, respectively. What is Dr. Adrina’s income tax liability for 2018?
Self-employed → Graduated Rate
Gross Receipt P5,700,000
(less) Cost of Services P2,200,000
Gross Income P3,500,000
(less) Operating Expense P750,000
Net Taxable Income P2,750,000 →P490,000 + 32% of excess over
P2,000,000
-P2,000,000
P750,000
× 32%
P240,000
+ P490,000
P730,000 is her income tax liability
Quiz - Problem Tax on Individuals

Problem 5
Mr. Blanco is the owner of a music lounge. For the year 2018, records showed that gross sales and
receipts amounted to P2,350,000, cost of sales was P1,050,000, operating expenses was P550,000
and non-operating income was P175,000. Compute for Mr. Blanco’s income tax due for 2018.
Self-employed → Graduated Rate
Gross Receipt P2,350,000
(less) Cost of Sales P1,050,000
Gross Income P1,300,000
(add) Non-operating Income P175,000
(less) Operating Expense P550,000
Net Taxable Income P925,000 → P130,000 + 30% of excess over P800,000
- P800,000
P125,000
× 30%
P37,500
+ P130,000
P167,500 is his income tax liability
Problem 6
Mr. Adarius operates a videoke bar. Gross sales and receipts for 2018 amounted to P5,500,000.
His accounting records also showed the following: Cost of sales – P2,800,000; operating expenses –
P950,000; and non-operating income – P350,000. What is the income tax due of Mr. Adarius for
2018?
Self-employed → Graduated Rate
Gross Receipt P5,500,000
(less) Cost of Sales P2,800,000
Gross Income P2,700,000
(add) Non-operating Income P350,000
(less) Operating Expense P950,000
Net Taxable Income P2,100,000 →P490,000 + 32% of excess over
P2,000,000
- P2,000,000
P100,000
× 32%
P32,000
+ P490,000
P522,000 is his income tax liability
Problem 7
In 2018, Mr. Bonaro, Senior Manager of Bosley, Inc. earned an annual compensation of P1,670,000.
Aside from being employed, he is also into business of selling travel accessories. His gross sales for
the year were P2,700,000. His cost of sales and operating income were P1,200,000 and P700,000,
respectively, while non-operating income was P250,000.

A. Compute for the income tax due for 2018 assuming that he signified his intention to be taxed
at 8% income tax rate on his gross sales for his income from business.
Mixed
 Compensation P1,670,000 → P130,000 + 30% of excess over P800,000
- P800,000
P870,000
× 30%
P261,500
+ P130,000
P391,000

 Business P2,700,000 → 8% income tax rate on his gross sales

× 8%
P216,000
Compensation + Business → P391,000 + P216,000 = P607,000 is his income tax due
Quiz - Problem Tax on Individuals

B. Had Mr. Bonaro opted not to be taxed at the 8% income tax rate based on gross sales and
other non-operating income, what will be his income tax due for 2018?
Mixed - Employed → Graduated Rate
P1,670,000
- P2,700,000
P4,370,000 → P490,000 + 32% of excess over P2,000,000
- P2,000,000
P2,370,000
× 32%
P758,400
+ P490,000
P1,248,000 is his income tax due

Problem 8
Philippine charity sweepstakes winnings P500,000(20%)
Royalty income – books 120,000(10%)
Other royalty income 60,000(20%)
Dividend income – domestic corporations 40,000(10%)
Interest income – BDO Quezon City 100,000(20%)
Interest income received from a depository bank under expanded foreign
currency deposit system 50,000(15%)

How much is the total final tax on passive income? P155,500

Problem 9
Interest income from peso bank deposit – Philippines 20,000(20%)
Interest income received from a depository bank under expanded foreign
currency deposit system 40,000(15%)
Royalty income from composition 25,000(10%)
Raffle draw winnings 10,000(0%)
PCSO winnings 200,000(20%)
Dividend income from domestic corporation 50,000(10%)

How much is the total final tax on passive income? P57,500