INCOME TAXATION Raw Total

PRELIM LONG QUIZ 1 P1 10

P2 26
P3 15
NAME: ______________________________ C/Y/S: ________ P4 8
DATE: __________________ P5 8
P6 8
Total 75
PROBLEM 1
Samina Meenah, a sole proprietor of a dealer of rice and corn products, unmarried, with a younger sister dependent revealed to us the
following data for the current year 2019:

Philippines U.S.A
Income from employment 216,000 336,000
Interest income on personal loans 7,200 3,600
Interest income on bank deposits 13,000 5,000
Interest income on money market placements 9,000 1,900
Dividend income from domestic corporation 6,800 -
Dividend income from foreign corp 8,200 2,400
Royalty income 108,000 60,000
Awards from sports contest 96,000 36,000
Winnings from raffle draws 54,000 20,300
Prizes from singing contest 6,700 -
Share in net income of a general co-partnership 72,000 48,000
Winnings from PCSO 42,000
Gross profit from sale of goods 720,000 60,000
Gain from sale of shares of a domestic company directly to a buyer 20,000
Business expenses 144,000 12,000

SOLUTIONS: Normal Passive CG FT rate Final tax

Income from employment 552,000
Interest income on personal loans 10,800
Interest income on bank deposits 5,000 13,000 20% 2,600
Interest income on money market placements 1,900 9,000 20% 1,800
Dividend income from domestic corporation - 6,800 10% 680
Dividend income from foreign corp 10,600 -
Royalty income 60,000 108,000 20% 21,600
Awards from sports contest 36,000 96,000 20% 19,200
Winnings from raffle draws 20,300 54,000 20% 10,800
Prizes from singing contest 6,700 - -
Share in net income of a general co-partnership 48,000 72,000 10% 7,200
Winnings from PCSO - 42,000 20% 8,400
Gross profit from sale of goods 780,000 -
Gain from sale of shares of a domestic company directly to a buyer - 20,000 15% 3,000
Gross income 1,531,300 400,800 20,000 75,280
Business expenses (156,000)
Total 1,375,300 400,800 20,000

Income tax due 302,590

Compute the following:

Gross income subject to final tax on passive income 400,800
Gross income subject to normal tax 1,531,300
Taxable net income 1,375,300
Total final taxes 75,280
Annual income tax per ITR 302,590
 PROBLEM 2
Val Lahura, a resident citizen, a mixed income earner who has a non-VAT registered business reported the following income during the
taxable year:

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

Taxable compensation income 90,000 96,000 96,000 108,000
Gross sales 800,000 700,000 600,000 700,000
Cost of sales 320,000 280,000 240,000 280,000
Operating expenses 400,000 200,000 400,000 200,000
Other nonoperating income subject to normal tax 2,400 2,900 3,500 4,200
Withholding tax on business income 4,000 3,500 3,000 3,500
Withholding tax on wages 4,500 4,800 4,800 5,400
Dividend income from domestic corporation, net of tax 5,400 10,800 None 5,400

Assume the taxpayer did not opt to be taxed at 8% of gross

sales/receipts, compute the following: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Total tax credits per ITR 4,000 7,500 14,060 37,060
Income tax still due and payable or (overpayment) (4,000) 3,560 (10,300) 117,840
Taxable income 82,400 305,300 268,800 883,000
Business tax 24,000 21,000 18,000 21,000
Gross income 482,400 905,300 1,268,800 2,083,000

SOLUTIONS: 1st 2nd 3rd 4th

Gross profit from sales 480,000 900,000 1,260,000 1,680,000
Operating expenses (400,000) (600,000) (1,000,000) (1,200,000)
Taxable business income 80,000 300,000 260,000 480,000
Other nonoperating income subject to normal tax 2,400 5,300 8,800 13,000
Taxable business income 82,400 305,300 268,800 493,000
Compensation income 390,000
Taxable income 82,400 305,300 268,800 883,000

Income tax due - 11,060 3,760 154,900

Less: Tax credits
BIR Form 2316 (19,500)
BIR Form 2307 (4,000) (7,500) (10,500) (14,000)
BIR Form 1701Q - (3,560) (3,560)
Tax still due and payable (4,000) 3,560 (10,300) 117,840
 Assume the taxpayer is purely self-employed (ignore
compensation income) & opt to be taxed at 8% of gross
sales/receipts, compute the following:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Income tax due 44,192 100,424 148,704 205,040
Total tax credits per BIR Form 2307 4,000 7,500 10,500 14,000
Income tax still due and payable or (overpayment) 40,192 52,732 45,280 33,336
Business tax None None None None
SOLUTIONS: 1st 2nd 3rd 4th
Gross sales 800,000 1,500,000 2,100,000 2,800,000
Other nonoperating income subject to normal tax 2,400 5,300 8,800 13,000
802,400 1,505,300 2,108,800 2,813,000
(250,000) (250,000) (250,000) (250,000)
Tax base 552,400 1,255,300 1,858,800 2,563,000
Preferential tax rate 8% 8% 8% 8%
Income tax due on business income 44,192 100,424 148,704 205,040
Income tax due 44,192 100,424 148,704 205,040
Less: Tax credits
BIR Form 2316 - - - (19,500)
BIR Form 2307 (4,000) (7,500) (10,500) (14,000)
BIR Form 1701Q (40,192) (92,924) (138,204)
Tax still due and payable 40,192 52,732 45,280 33,336

PROBLEM 3
The taxpayer has the following information during the taxable year:

Philippines Canada
Gross sales 800,000 400,000
Cost of sales 320,000 160,000
Business expenses 96,000 64,000
Cash prize from singing contest 5,000 7,000
Raffle draw winnings 5,000 1,000
Dividend income from a domestic corporation 20,000

NRANETB
Resident Resident (Ignore items if
Compute the following: Citizen Alien NRAEB applicable)
Gross income subject to normal tax (1 point each) 733,000 485,000 485,000 None
Gross income subject to final tax (1 point each) 25,000 25,000 25,000 30,000
Income tax expense (2 points each) 76,250 30,800 32,800 7,500

SOLUTIONS:
Philippines Canada Total
Gross sales 800,000 400,000 1,200,000
Cost of sales 320,000 160,000 480,000
Gros profit 480,000 240,000 720,000
Raffle draw winnings 1,000 1,000
Cash prize from singing contest 5,000 7,000 12,000
Gross income 485,000 248,000 733,000
Business expenses (96,000) (64,000) (160,000)
Net taxable income 389,000 184,000 573,000

RC RA NRC NRAEB NRANEB

Normal tax due 73,250 27,800 27,800 27,800
Final tax 3,000 3,000 3,000 5,000 7,500
Income tax expense 76,250 30,800 30,800 32,800 7,500
 Passive income subject to final tax: RC RA NRC NRAEB NRANEB
Cash prize from singing contest - - - - 5,000
Raffle draw winnings 5,000 5,000 5,000 5,000 5,000
Dividend income from a domestic corporation 20,000 20,000 20,000 20,000 20,000
Total 25,000 25,000 25,000 25,000 30,000

PROBLEM 4
Gior, a single citizen, has the following income during the taxable year 2018:

Jan - April May to Dec

Compensation 150,000 400,000
Gross sales - Philippines, net of 1% CWT 297,000 594,000
Cost of sales - Philippines 118,800 237,600
Business income - abroad 40,000 150,000
Business expenses - Philippines 47,520 95,040
Interest income on savings deposit - Phil. 4,000 30,000
Interest income on savings deposit under FCDS - Phil. 10,000 30,000
Interest income on bank deposit - abroad 20,000 50,000

Gior is earning rent income in the Philippines for a monthly rent of 20,000 less 5% CWT.
Gior finished his 5 year contract as OFW on April 30 2018 and settled in the Philippines during the rest of the taxable year.

Compute the following:

Taxable income 1,241,040
Income exempt from tax 220,000
Final tax on passive income 11,300
Income tax still due and payable 241,312
Income tax due 262,312

SOLUTION: Normal Final Tax-exempt

Gross sales - Phil 900,000
Cost of sales - Philippines (356,400)
Business income - abroad 150,000 40,000
Interest income - SD - Phil 34,000
Interest income - SD (FCDS) - Phil 30,000 10,000
Interest income - abroad 50,000 20,000
Rent income (20K x 12 months) 240,000
Total 983,600 64,000 70,000
Business expenses (142,560)
Gross business income 841,040
Compensation income 400,000 150,000
Taxable income No. 1 1,241,040 2 points 220,000 No. 2

Tax on the 1st 800,000 130,000

Excess 30% 1,241,040 800,000 132,312
Income tax due 2 points 262,312 No. 5
Less: CWT on sales 900,000 1% (9,000)
CWT on rent 240,000 5% (12,000)
Income tax still due and payable 2 points 241,312 No. 4

Interest income - SD - Phil 20% 34,000 6,800

Interest income - SD (FCDS) - Phil 15% 30,000 4,500
Final tax on passive income No. 3 11,300
2 points
PROBLEM 5
A resident citizen has the following gains on the sale of various properties earned during the current taxable year:

Capital gain on sale of shares of a domestic corporation directly to a buyer 120,000

Capital gain on sale of shares of a domestic corporation traded in Philippine Stock Exchange 24,000
Capital gain on sale of shares of a Nonresident foreign corporation directly to a buyer 48,000
Capital gain on sale of shares of a Nonresident foreign corporation traded in New York Stock Exchange 180,000
Capital gain on sale of land in the Philippines: SP = 3 Million, Zonal Value = 3.5 Million 360,000
Capital gain on sale of land in the USA: SP = 5 Million 480,000
Ordinary gain on sale of land in the Philippines: SP = 6 Million, Zonal Value = 6.1 Million 240,000

Compute the following:

Capital gains tax 228,000
Taxable net income 948,000
Income not subject to income tax 24,000
Income Tax due 174,400

SOLUTION: Normal Exempt Final Final tax rates Final tax

Capital gain on sale of shares of a domestic corporation
directly to a buyer 120,000 15% 18,000
Capital gain on sale of shares of a domestic corporation
traded in Philippine Stock Exchange 24,000
Capital gain on sale of shares of a Nonresident foreign
corporation directly to a buyer
48,000
Capital gain on sale of shares of a Nonresident foreign
corporation traded in New York Stock Exchange
180,000
Capital gain on sale of land in the 3,500,000
Philippines: SP = 3 Million, Zonal Value =
3.5 Million 6% 210,000
Capital gain on sale of land in the USA: SP = 5 Million
480,000
Ordinary gain on sale of land in the Philippines: SP = 6
Million, Zonal Value = 6.1 Million 240,000
Total 948,000 24,000 120,000 228,000

Income tax due 174,400.00

PROBLEM 6
The withholding taxes from the various income of Samina Meenah, a resident citizen, are as follow:

Interest income on bank deposit 28,800

Interest income on bank deposit under FCDS 3,600
Compensation for a three month engagement (3% of gross compensation) 18,000
Prizes received from a singing competition 7,200
Dividend income from domestic corporation 2,600
Sale of shares of stock sold directly to a buyer 2,700
Sale of real property classified as capital asset 43,200

Moreover, Sam Manewah also earned items of gross income equal to that of Saminah, except for prize from singing competition and gain
from sale of capital assets.
Compute the following:
Gross passive income of Samina Meenah subject to final tax 230,000
Final taxes on passive income of Sam Manewah assuming he is a nonresident citizen 31,400
Final taxes on passive income of Sam Manewah if he is a nonresident alien engaged in business
34,000
Gross income of Sam Manewah subject to final tax assuming he is a resident citizen 194,000
Income tax still due and payable of Samina Meenah
62,000
SOLUTIONS:
RC, RA NRC NRAETB NRANETB
Interest income on bank deposit 20% 20% 20% 25%
Interest income on bank deposit under FCDS 15% Exempt Exempt Exempt
Prizes received from a singing competition 20% 20% 20% 25%
Dividend income from domestic corporation 10% 10% 20% 25%
Sale of shares of stock sold directly to a buyer 15% 15% 15% 25%
Sale of real property classified as capital asset 6% 6% 6%

│-----------------------------SAM MANEWAH---------------------------│
Passive income Gross Income Final tax Final tax Final tax Final tax
Interest income on bank deposit 144,000 28,800 28,800 28,800 36,000
Interest income on bank deposit under FCDS 24,000 3,600
Prizes received from a singing competition 36,000
Dividend income from domestic corporation 26,000 2,600 2,600 5,200 6,500
Total 230,000 35,000 31,400 34,000 42,500
Capital gain
Sale of shares of stock sold directly to a buyer 18,000 2,700
Sale of real property classified as capital asset 720,000 43,200
Total 738,000 45,900 - - -
Total 968,000 80,900 31,400 34,000 42,500

Compensation for a three month engagement (3% of gross compensation)

600,000 150,000
192,500
Income tax due on compensation income 80,000
Less: WTW (18,000)
Income tax still due and payable of Samina Meenah 62,000