Seatwork #2 Midterm

Regular Income Tax for Individuals Part II

Name: ______________________________ Score: ___/50

Year and Blk: _________________________

General Instruction: Write your answers and solutions in the space provided. No solution, no point.

Problem No. 1
Jake Peralta, after retiring from the NYPD, established a Private Investigation business. He has reported the following operational
results:
Receipts 1,250,000
Cost of service 250,000
Interest from depository banks under FCDU, gross of withholding tax 15,000
Business expenses 400,000
Gain on sale of old office building 1,500,000
Gain on sale of old residential house 800,000
Prize from firing range competition 5,000
Cash received as tax informer’s rewards 900,000
Note: Please review the previous topics on your TAX 1a before solving this problem.

Requirements:
1. How much is the final withholding tax due? ____________________
2. How much is the capital gains tax due? ____________________
3. Using the regular tax option, how much is the income tax due? _______________________
4. Using the 8% income tax option, how much is the income tax due? _______________________
5. If you are Jake Peralta's accountant, which of the following income tax options is better and why? (3pts)
__________________________________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________________________________

Use this section for your solutions.

Problem No. 2
Rosa Diaz, a Filipino citizen, lives and works in Singapore as an IT professional and owns a gasoline station in the Philippines. As a
professional, she received a $70,000 annual salary. In her gas station, she had ₱14,000,000 in sales with a 10% gross profit rate.
The gas station also incurred ₱150,000 in business expenses. Additionally, the currency exchange rate is $1: ₱41.

Requirements:
6. Using the regular tax option, how much is the income tax due? _______________________
7. Using the 8% income tax option, how much is the income tax due? _______________________
8. If you are Rosa Diaz's accountant, which of the following income tax options is better and why? (3pts)
__________________________________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________________________________

Use this section for your solutions.

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Problem No. 3
Raymond, a minimum wage employee, runs a part-time business after work. He received a total minimum wage of ₱302,000,
including a ₱12,000 13th-month pay but net of ₱5,000 mandatory deductions. Additionally, he earned ₱300,000 from his sideline
business.

Requirements:
9. How much is the taxable income? ______________________
10. How much is the income tax due? ______________________
11. Can Raymond opt to use the 8% income tax option? Why or why not? (3pts)
__________________________________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________________________________

Use this section for your solutions.

Problem No. 4
Gina, a government rank-and-file employee, received a gross compensation of ₱1,000,000. This includes ₱17,000 for Christmas
bonus, ₱13,000 for 13th-month pay, ₱10,000 for 14th-month pay, and ₱5,000 for performance bonus.

Requirements:
12. How much is the taxable compensation income? ______________________
13. How much is the income tax due? ______________________

Assume that in addition to the given above, Gina also received ₱150,000 after selling her personal car to a friend.
14. How much is the income tax due? _______________________

Use this section for your solutions.

Problem No. 5
Amy, a flight stewardess from Philippine Airlines, also owns a travel agency. She received the following income and expenses:
Compensation income, net of 62,500 withholding tax on compensation 750,000
1st Quarter business income 230,000
2nd Quarter business income 330,000
3rd Quarter business income 180,000
4th Quarter business income 400,000

Requirements:
Using the 8% income tax option, compute for
15. 1st quarter tax payable ___________________________________
16. 2nd quarter tax payable ___________________________________
17. 3rd quarter tax payable ___________________________________
18. Annual income tax payable ___________________________________

Using the regular income tax option, compute for

19. 1st quarter tax payable ___________________________________
20. 2nd quarter tax payable ___________________________________
21. 3rd quarter tax payable ___________________________________
22. Annual income tax payable ___________________________________

23. Which of the following income tax options is better and why? (3pts)

_____________________________________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________________________________
You may use the back page for your solution.

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