Income Tax: Corporation,

Partnership & Other Taxpayers

(Problem Solving)

ATTY. YASMEEN L. JUNAID, CPA

Instructor
(For Discussion Purposes Only)

PT-UDZ-001A; Revision 3.0.0; October 05, 2022

Problem 1
During the 2018, a domestic corporation derived the following items of
revenue:
• Gross receipts from a trading business, P500,000
• Interests from money placements in the banks, P30,000
• Dividends from its stock investments in domestic corporations, P20,000
• Gains from stock transactions through the PSE, P50,000
• Proceeds under the insurance policy of the lost of goods, P100,000

How much should the corporation report as taxable income?

PT-UDZ-001A; Revision 3.0.0; October 05, 2022

Solution
Item A – taxable income
Item B – passive income subject to FWT (20%)
Item C – an inter-corporate dividend which is tax-exempt
Item D – subject to Percentage Tax
Item E – a return on investment not subject to tax

ANSWER: P500,000

PT-UDZ-001A; Revision 3.0.0; October 05, 2022

Problem 2
EX Company and GF Company formed a joint venture. They agreed to share profit
or loss in the ratio of 70% and 30%, respectively. The results of operations of the
joint venture as well as the co-venturers are as follows:
JV EX Co. GF Co.

Gross Income P5,000,000 3,000,000 2,000,000

OpEx 3,000,000 2,000,000 1,500,000

How much is the income tax payable of the joint venture?

PT-UDZ-001A; Revision 3.0.0; October 05, 2022

Solution
Gross income 5,000,000
Operating expense (3,000,000)
Taxable net income 2,000,000
RCIT x 25%
Income Tax Due of JV 500,000

PT-UDZ-001A; Revision 3.0.0; October 05, 2022

Problem 3
The following information was taken from the records of YANG Inc., a domestic corporation already in its 5th year of operations:
Gross profit from sales P3,100,000
Capital gain on sale directly to buyer of shares in Domestic corp. 100,000
Dividend from:
Domestic corporation 20,000
Resident foreign corporation 10,000
Interest on:
Bank deposit 20,000
Trade receivables 50,000
Business expenses 2,100,000
Income tax withheld 115,000
Quarterly income tax payments 160,000
Income tax payable prior years (10,000)

How much is the income tax payable at the end of the year?

PT-UDZ-001A; Revision 3.0.0; October 05, 2022

Solution
Gross profit from sales 3,100,000
Dividends from FC 10,000
Interest Income on trade receivable 50,000
Total Gross Income 3,160,000
Income Tax Due (HIGHER) 265,000
Less: Business Expenses (2,100,000)
Less:
Taxable Net Income 1,060,000
Quarterly Tax Payments (160,000)
Income tax withheld (115,000)
Excess payments – prior year (10,000)
RCIT (1,060,000 x 25%) 265,000 Whichever is
HIGHER Income Tax Payable 33,000
MCIT (3,160,00 x 1%) 31,600

PT-UDZ-001A; Revision 3.0.0; October 05, 2022

Problem 4
Anita died leaving an estate worth P10,000,000. The estate is under
administration. In 2018, the properties in the estate earned a gross
income of P600,000 and incurred expenses of P150,000. Eva, one of
the heirs, received P120,000 from its 2018 income of the estate. How
much is the Estate’s taxable net income?

PT-UDZ-001A; Revision 3.0.0; October 05, 2022

Solution

Gross Income 600,000

Operating Expenses (150,000)
Income of the estate distributed to Eva (120,000)
Estate’s taxable income 330,000

PT-UDZ-001A; Revision 3.0.0; October 05, 2022

Problem 5
In 2018, Sarah created two trusts for his minor daughter, Ana. During
the year, the two trusts earned net income as follows:
Trust 1 P4,000,000
Trust 2 6,000,000

How much is the total income tax due of the Two Trusts?

PT-UDZ-001A; Revision 3.0.0; October 05, 2022

Solution
Net Income – Trust 1 4,000,000
Net Income – Trust 2 6,000,000
Consolidated Taxable Net Income 10,000,000

Consolidated Income Tax Due (Graduated Rates)

First 8,000,000 2,410,000
In excess of 8M (2M x 35%) 700,000
Total Income Tax Due 3,110,000

PT-UDZ-001A; Revision 3.0.0; October 05, 2022

Thank you!

PT-UDZ-001A; Revision 3.0.0; October 05, 2022