XINTAC

Name:_______________________ Date:____________________
Section:______________________ Assignment
True or False

1. All compensation payments made by an employer to an employee are deductible to the employer.
2. To be allowed as a valid deduction, charitable and other contribution must not exceed 5% of taxable
income before charitable contributions, in case of individuals.
3. The allowable deduction for pension payments to employees will only apply to those pension plans
that are funded.
4. Interest incurred in the financing of petroleum operations may at the option of the taxpayer be
capitalized or expensed.
5. Losses must be reported to the BIR within 30 days from the occurrence of the casualty, robbery
theft or embezzlement giving rise to the loss.
6. Depreciation on revaluation surplus of properties can be deducted as part of depreciation expense.
7. With the exception of domestic corporations and resident citizens, expenses incurred abroad
cannot be deducted unless incurred in connection with the Philippine Business
8. Private educational institutions are allowed to deduct capital expenditures.
9. Dividends are non-deductible except dividends declared by real estate investment trust.
10. An adopting private entity of a public school is entitled to a deduction incentive equivalent to
double the amount donated to a public school.
11. Persons with disability are mandatorily allowed a discount of 20% from all establishments.
12. Taxpayers opting to the OSD are not required to submit financial statements.
13. OSD is in lieu of all deductions against gross income including personal exemptions.
14. Documentary stamp tax maybe deducted from gross income.
15. In the year 2000, Interest expense in connection with the taxpayer’s business shall be reduced by an
amount equal to 39% of interest income subjected to final tax.

Problem
The following information relates to HOGWARTS Corporation
2022 2023
Gross Sales P3,300,000 P4,340,000
Cost of Sales 2,400,000 1,070,000
Dividend-foreign Corporation 140,000 ---
Dividends-Domestic Corporation 50,000 10,000
Interest income on notes receivable 28,000 16,400
Interest income from bank deposits 100,000 60,000
Capital gain --- 13,000
Capital loss 20,000 ---
Interest Expense 150,,000 180,000
Tax expense (see breakdown below) 63,000 106,079
Bad debts-written off 34,680 ---
Bad debts-recovery --- 22,000
Pension expense (see breakdown) 45,000 68,000
Discount given to Senior Citizen-25% 155,000 150,000
Other Special deductions under NIRC 17,500 23,500
Salary of PWD Workers 75,000 95,000
Productivity incentives 120,000 130,500
Other Deductions 775,000 1,025,000

Taxes paid:
License tax 8,000 9640
Documentary stamp tax 7,650 8,567
Capital Gains Tax 12,344 11,780
Special Assessment 15,000 33,570
Municipal tax 20,006 42,522

Pension expense
Current Service Cost 30,000 50,000
Past Service Cost 15,000 18,000

1. Net operating income/loss for 2022?

2. Net operating loss carry over for 2022?
3. Income tax payable for 2022?
4. Interest expense deductible for 2022?
5. Pension expense deductible for 2022?
6. Special deductions for 2022?
7. Regular deductions for 2022?
8. Gross income (after other income) for
2023?
9. Deductible interest expense for 2023?
10. Deductible Pension expense for 2023?
11. Deductible Tax Expense for 2023?
12. Regular deductions for 2023?
13. Special deductions for 2023?
14. Tax liability for 2023?