Final Revision

1. Tax Accountability of Real Estate Wealth Revenues

Example:
Omar has a building which was constructed on 2023. The building consists of ten floors, each one of
them includes two flats.

If you know that:

1. He occupies the first floor for his own residential purpose.
2. The second, third and fourth floor are rented for a period of nine months on a monthly rent of
L.E 500 for each flat.
3. He constructed and prepared the reminder flats at an amount of L.E 150.000. On 1/8/2023, he
rented these flats at a monthly rent of L.E 2.000 for each flat.
4. He paid L.E 3.500 as real estate tax.
Required: Determine the taxable revenues of premises property (TRPP) for the taxable year ending
2023

Solution:
Rental value of premises property 27.000
( 3 * 2 * 500 * 9 )
Rental value of furnished unit: 120.000
( 6 * 2 * 2.000 * 5 )
Total rental value 147.000
Less:
SD (147.000 * 50%) (73.500)
PNRV 73.500
Less:
Taxes of built realities (3.500)
TRPP 70.000

2- Tax accountability of non-commercial profession revenues (TNCPRs)

Example:
The following information is revealed from an engineering consultant office for the year ended
2023.
First: Revenues received during the year:
▪ L.E 2.500 fees of engineering designs during the year.
▪ L.E 1.800 fees of engineering designs in previous years.
▪ L.E 45.000 accrued fees of engineering designs finished in previous year.
▪ L.E 1.200 collected awards for lectures in training centers of the housing ministry.

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Second: The following amounts were paid during the year:
▪ L.E 9.600 salary paid
▪ L.E 780 office expenses including water, electricity.
▪ L.E 120 subscriptions in syndicate.
▪ L.E 5.000 cost of air condition device was purchased in 1/1/2023 with the taxable
depreciation rate is 10%.
▪ L.E 900 subscriptions in the syndicate pension fund
▪ L.E 1.200 insurance premium one life for the benefit of his wife.
▪ L.E 1.000 contributions to Helal Ahmer
Required: Compute TNCPR if you know that the taxpayer does not keep regular books.

Solution:

Particulars L.E L.E

1- Taxable revenues:
• Revenues from profession (2500 + 1800) 4.300
• Capital Gains ------
• Incidental Revenues related to exercising a profession. 1200

Total of Taxable Revenues 5.500

1- Expenses for exercising the profession. (10% *5.500) (550)

2- Taxable Net Revenues before contributions
4.950
Contribution to the governmental entities -------
Contribution to the non-governmental entities (4.950*10%) (495)

TNCPR 4.455

3- Tax accountability of commercial and industrial profits (TC&IPs) (Allowable

Deductions)

Example:
The net profit of a sole proprietorship was L.E 312.500 for the year ended on 31/12/2021. For the
purpose of filling in the tax return, the tax examination revealed that the profit and loss account
was debited for the following sums:
1- L.E 158.000 depreciation expenses of a group of computers and information systems at a
rate of 25%, knowing that net book value in the beginning balance of this group approved
by the taxation examiner was L.E 730.000. On 1/4/2021, there were additions with a cost
of L.E 112.000.

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 2- L.E 8.000 is installation costs for the computer and information systems.
3- L.E 6.000 interest expenses on the owner's loan
4- L.E 20.000 taxes and duties paid included L.E 15.000 paid on account of TOII and L.E
800 tax of the building which is owned and occupied by the firm for the purpose of
carrying on its own business.
5- L.E 12.000 depreciation expenses of the building which is owned and occupied by the
firm at a rate of 8%,
6- L.E 7.000 the result of settling the allowance for doubtful account (AFDA),
Required: Determine the TNP.
Solution:
Measurement of TNP:
L.E L.E
NP 312.500
Add:
(3) Interest of loans: - Belonging to firm's owner, it disallowed 6.000
as deduction.
(4) TOII is not allowed as deduction. 15.000
(5) Excessive depreciation of the buildings owned and 4.500
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occupied by the firm (12.000 * 8 ) as the increase of
depreciation rate.
7.000
(6) allowance for doubtful accounts (AFDA) is non-deductible,
so it is added 32.500

Total Taxable profit 345.000

Less:
**(267.000)
(1) Difference in the taxable depreciation of computers.
(267.000)
TNP 78.000

(**): The depreciation expenses of computers:

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 L.E
Book value at the beginning of the year. 730.000
Add:
Additions during the year (112.000 + 8000) 120.000
The depreciation base 850.000
Depreciation rate * %50
taxable depreciation expenses 425.000
Due to the accountant deducted only L.E 158.000, the difference in the taxable depreciation
of computer by L.E 267.000 = (425.000 - 158.000) should be deducted.

Multiple- Choice Questions

1- The net profit of a firm does not include LE 15.000 financial penalties as a result of
violation of the law. The necessary adjustment on Detailed statement of tax return
(DSTR) is….
a) Add L. E 15.000 b) less LE 15.000 c) No adjustment d) other answer

2- The taxable net profit before contributions of a firm was L.E 220.000 for the year
ended on 31/12/2024. knowing that there was taxable net loss of L.E 85.000 for the
year ended on 31/12/ 2018. This sum was not covered until 2020 year. What is the
amount of tax base?

a) L.E 220.000 b) L.E 135.000 c) other answer

3- If the net profit of a firm includes L.E 19.000 debit interest expense of a loan obtained
from CIB bank at a rate of 19%. (The rate declared by the C.B (central bank) in
1/1/2021 was 9%. The necessary adjustment on DSTR is ……

(a) Add L.E 1.000 (b) Add L.E 19.000 (c) Add L.E 1.000 & Less L.E 19.000 (d) other answer
4- The net profit of a sole – proprietorship does not include L L.E 10.000 the rent revenue
collected as a result of leasing a building owned by the firm in the benefit of other
party, the monthly rent value is L.E 1.000 .The necessary adjustment on the DSTR
is ………
(a) Less L.E 12.000 (b) Add L.E 12.000 (c) Add L.E 10.000 (d) other answer

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True / False Questions
Section One:
1- The legislator permits to carry forward the taxable net loss (TNL) for a period of ten
years
2- The deductible expenses are only that are documented supported
3- The firm traded in goods for furniture. The sticker price of the Furniture is L.E 35.000.
The goods were recorded as sales amount of 30.000. The necessary adjustment on the
DSTR is Add L.E 5.000
4- The profits derived from land's reclamation are subject to TOII
5- TOII does not make distinction between income derived from legal activity and income
attainted with illegality.
6- The tax treatment of the credit interest on the bonds that are issued by the ministry of
finance is similar to the tax treatment of rent revenues

Section two
The net profit of a firm for the year ended December 31,2022 was L.E 600,00. Given the
information revealed by tax examination in each of the following separate cases, determine
whether the taxable not profit (TNP) calculated in each Case is true or False.
1- The value of beginning inventory was L.E 1,275,000. Beginning inventory was valued at
20% over its cost. In this case the TNP would be L.E 587,500
2- L.E 50,000 compensations awarded by the court to the benefit of the firm were included in
the income statement. The firm received only L.E 20,000 cash of the compensations during
the year. In this case the TNP would be L. E 600,000
3- Bad debts recovered of L.E 70,000 were included in the income statement. Only L.E
50,000 of these debts was earlier allowed as deductions. In this case the TNP would be
L.E 620,000