NAME: Jimenez, Ross John C.

Year-Course-Section: 3-BSMA-A
CHAPTER 5 ASSIGNMENT

P5.1.
Requirement 1
Gross sales – Philippines P 12,000,000
Cost of goods sold – Philippines (3,600,000)
Gross Profit 8,400,000
Operating expenses – Philippines (2,200,000)
Net Income 6,200,000
Other Income 500,000
Taxable income 6,700,000
Tax rate 25%
Income Tax Due P 1,675,000

Requirement 2

Gross sales – Philippines P 12,000,000

Cost of goods sold – Philippines (3,600,000)
Gross Profit 8,400,000
Operating expenses – Philippines (2,200,000)
Net Income 6,200,000
Other Income 500,000
Taxable income 6,700,000
Tax rate 25%
Income Tax Due P 1,675,000

Requirement 3

Gross sales – Philippines P 12,000,000

Cost of goods sold – Philippines (3,600,000)
Gross Profit 8,400,000
Operating expenses – Philippines (2,200,000)
Net Income 6,200,000
Other Income 500,000
Taxable income 6,700,000
Tax rate 25%
Income Tax Due P 1,675,000
P5.2.
Requirement 1

Gross sales – Philippines P 12,000,000

Cost of goods sold – Philippines (5,600,000)
Operating expenses – Philippines (2,800,000)
Taxable income P 3,600,000
Tax rate 20%
Income Tax Due P 720,000

Requirement 2
Gross sales – Philippines P 12,000,000
Cost of goods sold – Philippines (5,600,000)
Operating expenses – Philippines (2,800,000)
Taxable income P 3,600,000
Tax rate 25%
Income Tax Due P 900,000
Requirement 3
Gross sales – Philippines P 12,000,000
Cost of goods sold – Philippines ( 5,600,000 )
Operating expenses – Philippines ( 2,800,000 )
Taxable income P 3,600,000
Tax rate 20%
Income Tax Due P 720,000

P5.3.
Domestic Corporation

Requirement 1
Gross sales – Philippines P 8,000,000
Gross sales – USA 4,600,000
Gross sales – Australia 3,300,000
Cost of goods sold - Philippines (3,500,000)
Cost of goods sold - USA (1,430,000)
Cost of goods sold - Australia (900,000)
Operating expenses - Philippines (2,200,000)
Operating expenses - USA (1,250,000)
Operating expenses - Australia (800,000)
Other income – Philippines 750,000
Taxable income P 6,570,000
Tax rate 25%
Income Tax Due P 1,642,500
 Requirement 2

Gross sales – Philippines P 8,000,000

Cost of goods sold - Philippines (3,500,000)
Operating expenses - Philippines (2,200,000)
Other income – Philippines 750,000
Taxable income P 3,050,000
Tax rate 25%
Income Tax Due P 762,500

Requirement 3

Gross sales – Philippines P 8,000,000

Cost of goods sold - Philippines (3,500,000)
Other income – Philippines 750,000
Taxable income P 5,250,000
Tax rate 25%
Income Tax Due P 1,312,500

P5.4.
CASE A: DOMESTIC CORPORATION
1. Tax due - MSME
PHILIPPINES ABROAD TOTAL
Gross sales P 10,000,000 P 5,000,000 P 15,000,000
Sales return 200,000 (200,000)
Cost of goods sold 3,500,000 2,250,000 (5,750,000)
Interest income from trade 100,000 50,000 150,000
receivable
Interest income from BPI – USA 80,000 80,000
Income from money market 100,000 100,000
placement
Dividend income from non-resident 30,000 30,000
corporation
Royalty income 25,000 25,000
TOTAL P 9,435,000
Operating expenses 2,800,000 1,100,000 (3,900,000)
Taxable income P 5,535,000
Tax rate for MSME 20%
RCIT due P 1,107,000
MCIT (9,435,000 X 1 %) P 94,350
Income Tax Due Higher P 1,107,000
 2. Tax due – not MSME
PHILIPPINES ABROAD TOTAL
Gross sales P 10,000,000 P 5,000,000 P 15,000,000
Sales return 200,000 (200,000)
Cost of goods sold 3,500,000 2,250,000 (5,750,000)
Interest income from trade receivable 100,000 50,000 150,000
Interest income from BPI – USA 80,000 80,000
Income from money market placement 100,000 100,000
Dividend income from non-resident 30,000 30,000
corporation
Royalty income 25,000 25,000
TOTAL P 9,435,000
Operating expenses 2,800,000 1,100,000 (3,900,000)
Taxable income P 5,535,000
Tax rate for MSME 25%
RCIT due P 1,383,750
MCIT (9,435,000 X 1 %) P 94,350
Income Tax Due Higher P 1,383,750

3. Total final tax due on passive income

PHILIPPINES FINAL TAX

Interest income from BPI deposits – Phils. P 100,000 P 20,000
@ 20%
Interest income – FCDU @ 15% 150,000 22,500
Income from money market placement @ 200,000 40,000
20%
Royalty income @ 20% 50,000 10,000
Total final tax due on passive income P 92,500

4. total capital gains tax due

CAPITAL GAINS TAX
Gain on sale of shares sold directly to a buyer [(150,000x
15%) P 22,500
Sale of real property in the Philippines (SP of P9M** x 6%)
P 540,000
Total Capital Gains Tax Due P 562,500
**SP = Cost + Gain = P4M + 5M = P9M; SP is higher than FMV
CASE B: RESIDENT FOREIGN CORPORATION (disregard disposition of real properties in the
Philippines)

5. Tax due on its ordinary income

Gross sales P 10,000,000
Sales return (200,000)
Cost of goods sold (3,500,000)
Interest income from trade receivable 100,000
Dividend income from ABC corporation,resident corp. 45,000

TOTAL P 6,445,000
Operating expenses (2,800,000)
Taxable income P 3,645,000
Tax rate 25%
Tax Due on its ordinary income P 911,250
MCIT (6,445,000 x 1%) 64,450
Income tax due higher P 911,250

6. Total final tax due on passive income

PHILIPPINES FINAL TAX
Interest income from BPI deposits-Phils. @ 20% P 100,000 P 20,000
Interest income from FCDS @ 15% 150,000 22,500
Income from money market placement @ 20% 200,000 40,000
Royalty income @ 20% 50,000 10,000
Final tax on passive income P 92,500

7. Gain on sale of shares sold directly to a

buyer (150,000 x 15%) = P 22,500

CASE C: RESIDENT FOREIGN CORPORATION

8. tax due on its ordinary income
Gross sales P 10,000,000
Sales return (200,000)
Cost of goods sold (3,500,000)
Interest income from trade receivable 100,000
Dividend income from ABC corporation, resident corp. 45,000
TOTAL P 6,445,000
Operating expenses (2,800,000)
Taxable income P 3,645,000
Tax rate 25%
Tax Due on its ordinary income P 911,250
MCIT (6,445,000 x 1%) 64,450
Income tax due higher P 911,250
9. Total final tax due on passive income

PHILIPPINES FINAL TAX

Interest income from BPI deposits-Phils. @ 20% P 100,000 P 20,000
Interest income from FCDS @ 15% 150,000 22,500
Income from money market placement @ 20% 200,000 40,000
Royalty income @ 20% 50,000 10,000
Final tax on passive income P 92,500

10. Total capital gains tax due

CAPITAL GAIN TAX
Gain on sale of shares sold directly to a buyer
(150,000 x 15%) P 22,500

CASE D: NON-RESIDENT CORPORATION (final withholding tax)

>disregard disposition of real properties in the Philippines
>there is tax sparing with regards to dividend income received from a DC
11.
Philippines Final tax
Interest income from BPI deposits-Phils. @25% P 100,000 P 25,000
Income from money market placement @25% 200,000 50,000
Dividend income from domestic corporation @15% 75,000 11,250
Dividend Income from ABC Corporation @25% 45,000 11,250
Royalty income @25 Final withholding tax % 50,000 12,500
Final withholding tax P 110,000

CASE E: NON-RESIDENT CORPORATION (final withholding tax)

>disregard disposition of real properties in the Philippines
>there is NO tax sparing with regards to dividend income received from a DC
12.
Philippines Final tax
Interest income from BPI deposits-Phils. @25% P 100,000 P 25,000
Income from money market placement @25% 200,000 50,000
Dividend income from domestic corporation @25% 75,000 18,750
Dividend Income from ABC Corporation @25% 45,000 11,250
Royalty income @25% 50,000 12,500
Final withholding tax P 117,500
P5.5.
CORRECT TAX TREATMENT

1. EXEMPT 6. EXEMPT
2. RCIT 7. RCIT
3. RCIT 8. EXEMPT
4. EXEMPT 9. 15%
5. EXEMPT 10. 25%

P5.6.
DETERMINE THE TOTAL FINAL TAX ON PASSIVE IN 2021 ASSUMING RISING STAR
INCORPORATED IS:
A. DOMESTIC CORPORATION
Dividend income from:
Masagana, a domestic corporation Exempt
Intel, a resident corp. within 50% Exempt
IBM, a resident corp. w/o 25% Exempt
Canon, a resident corp. w/o 45% Subject to RCIT
Microsoft , a non-resident corporation Subject to RCIT
Interest income from:
Current account, BDO P 600,000 20% P 120,000
Savings deposit, BPI 500,000 20% 100,000
Savings deposit, ABN-AMRO bank, Subject to RCIT
Canada
Interest income from gov’t bonds 200,000 20% 40,000
Interest income from FCDU account in 800,000 15% 120,000
Metrobank
Royalty income from domestic 100,000 20% 20,000
corporations
Total final tax – domestic corp. P 400,000

B. RESIDENT FOREIGN CORPORATION

Dividend income from:

Masagana, a domestic corporation Exempt
Intel, a resident corp. within 50% Subject to RCIT
IBM, a resident corp. w/o 25% Non-taxable
Canon, a resident corp. w/o 45% Non-taxable
Microsoft , a non-resident corporation Non-taxable
Interest income from:
Current account, BDO P 600,000 20% P 120,000
Savings deposit, BPI 500,000 20% 100,000
Interest income from gov’t bonds 200,000 20% 40,000
Interest income from FCDU account 800,000 15% in Metrobank 120,000

Royalty income from domestic 100,000 20% corporations 20,000

Total final tax – RFC P 400,000

C. NON-RESIDENT FOREIGN CORPORATION – TAX SPARING

Dividend income from:

Masagana, a domestic corporation P 300,000 15% P 45,000
Intel, a resident corp. within 50% 400,000 25% 100,000
IBM, a resident corp. w/o 25% Non-taxable
Canon, a resident corp. w/o 45% Non-taxable
Microsoft , a non-resident corporation Non-taxable

Interest income from:

Current account, BDO P 600,000 25% P 150,000
Savings deposit, BPI 500,000 25% 125,000
Interest income from gov’t bonds 200,000 25% 50,000
Interest income from FCDU account in Metrobank Exempt

Royalty income from domestic 100,000 25% corporations 25,000

Total final tax – NRFC w/ tax sparing P 495,000

D. NON-RESIDENT FOREIGN CORPORATION – NO TAX SPARING

Dividend income from:

Masagana, a domestic corporation P 300,000 25% P 75,000
Intel, a resident corp. within 50% 400,000 25% 100,000
IBM, a resident corp. w/o 25% Non-taxable
Canon, a resident corp. w/o 45% Non-taxable
Microsoft , a non-resident corporation Non-taxable
Interest income from:
Current account, BDO P 600,000 25% P 150,000
Savings deposit, BPI 500,000 25% 125,000
Interest income from gov’t bonds 200,000 25% 50,000
Interest income from FCDU account in Exempt
Metrobank
Royalty income from domestic 100,000 25% corporations 25,000

Total final tax – NRFC w/o tax sparing P 525,000

P5.7.
(QUARTERLY TAX RETURN)

Q1 Q2 Q3 Q4
Gross profit from P1,600,000 P3,200,000 P4,800,000 P6,200,000
sales
Business expenses (1,200,000) (2,400,000) (3,400,000) (4,200,000)
Taxable income 400,000 800,000 1,400,000 2,000,000
Tax rate 20% 20% 20% 20%
RCIT 80,000 160,000 280,000 400,000
MCIT (Gross 16,000 32,000 48,000 62,000
Profit x 1%)

TAX DUE
(Higher) P 80,000 P 160,000 P 280,000 P 400,000
Less: Income tax (30,000) (70,000) (130,000) (230,000)
withheld
Tax paid Q1 (50,000) (50,000) (50,000)
Tax paid Q2 (40,000) (40,000)
Tax paid Q3 (60,000)
Income tax due P 50,000 P 40,000 P 60,000 P 20,000

P5.8
ABC Co. domestic corp. RCIT and MCIT

Year 4 Year 5 Year 6 Year 7 Year 8

MCIT 100,000 60,000 50,000 40,000 20,000
RCIT 30,000 70,000 60,000 30,000 90,000
TAX DUE P 100,000 P 70,000 P 60,000 P 40,000 P 90,000
(Higher)
Excess MCIT
Year 4 (70,000)
Year 7 (10,000)
Income tax P 100,000 P0 P 60,000 P 40,000 P 80,000
due

P5.9.
ABC Co. RCIT, MCIT, excess MCIT and excess withholding taxes from prior year(s)
Q1 RCIT Q2 MCIT Q3 RCIT Q4 RCIT
Tax due 2021 P 300,000 P 990,000 P 1,410,000 P 2,010,000
Excess MCIT 2020 (90,000) - (90,000) (90,000)
Excess withholding 2020 (30,000) (30,000) (30,000) (30,000)
Taxes withheld 2021 (60,000) (150,000) (270,000) (375,000)
Quarterly tax (120,000) (810,000) (1,020,000)
Income tax payable P 120,000 P 690,000 P 210,000 P 495,000
P5.10.
(TAXABLE JOINT VENTURE)

JOINT VENTURE ABC Co. DEF Co.

Gross income P 50,000,000 P 30,000,000 P 20,000,000
Business expenses (30,000,000) (20,000,000) (15,500,000)
Taxable income 1. P 20,000,000 3. P 10,000,000 5. P 4,500,000
Tax rate 25% 25% 25%
RCIT tax due 2. P 5,000,000 4. P 500,000 6. P 1,125,000

P5.11.
(TAX EXEMPT JOINT VENTURE)
JOINT VENTURE ALPHA co. OMEGA Co.
Gross income P 40,000,000 P 20,000,000 P 8,000,000
Business expenses (30,000,000) (10,000,000) (2,500,000)
Share in the income of
the joint venture 5,000,000 5,000,000
Taxable income 1. P 20,000,000 3. P 15,000,000 5. P 10,500,000
Tax rate Nil; tax exempt 25% 25%
RCIT tax due 2. P 0 4. P 3,750,000 6. P 2,625,000

P5.12.
HANANIAH CORPORATION

1. Gross income – Philippines P 6,000,000

Deductions (4,000,000) P 2,000,000
Gross income – Abroad $50,000
Deductions (20,000)
$30,000
Dollar’s peso equivalent 45 1,350,000
Taxable income P 3,350,000
Tax rate 25%
Income tax due P 837,500

2. Gross income – Philippines P 6,000,000

Deductions (4,000,000)
P 2,000,000
Tax rate 25%
Income tax due P 500,000
 3. Gross income – Philippines P 6,000,000
Tax rate 25%
Income tax due P 1,500,000

4. Gross income – Philippines P 6,000,000

Tax rate 2.5%
Income tax due P 150,000

5. Gross income – Philippines P 6,000,000

Tax rate 1.5%
Income tax due P 90,000

6. Gross income – Philippines P 6,000,000

Tax rate 25%
Income tax due P 1,500,000

7. Gross income – Philippines P 6,000,000

Tax rate 4.5%
Income tax due P 270,000

8. Gross income – Philippines P 6,000,000

Tax rate 7.5%
Income tax due P 450,000

9. Taxable income P 3,350,000

Tax rate 1%
Income tax due P 33,500

10. Gross income – Philippines P 6,000,000

Deductions (4,000,000) P 2,000,000
Gross income – Abroad $50,000
Deductions (20,000)
$30,000
Dollar’s peso equivalent 45 1,350,000
Taxable income P 3,350,000
Tax rate 25%
Income tax due P 837,500

11. Nil; exempt

P5-13.
PACIFIC AIRLINES (international aircarrier)

1. Gross receipt P 8,000,000

Tax rate 2.5%
Income tax payable P 200,000
 2. Gross receipt P 8,000,000
Tax rate 1%
Income tax payable P 80,000

3. Nil; tax exempt on the basis of reciprocity

P5.14.
(NON-PROPRIETORY EDUCATIONAL INSTITUTION)
4. Related
1. Related
5. Related
2. Related
6. Unrelated
3. Related

P5.15.
(NON-PROPRIETORY EDUCATIONAL INSTITUTION)

Gross income, related activities P 5,000,000

Gross income, unrelated activities (excluding rental income)
5,000,000
Rental income from commercial spaces (gross of 5% WT) – Unrelated
2,000,000
Expenses, related activities (2,000,000)
Expenses, unrelated activities (3,000,000)
Taxable income P 7,000,000
Tax Rate (RCIT); Unrelated income > Related income 25%
Tax Due P 1,750,000
Less: CWT on rental income (P2M x 5%) (100,0000)
Quarterly tax payments for the first 3 quarters (500,000)
Income Tax Payable P 1,150,000

P5.16.
(NON-PROPRIETORY EDUCATIONAL INSTITUTION WITH CAPITAL EXPENDITURES)
Question 1
Tuition fees P 9,500,000
Miscellaneous fees 1,200,000
Income from bookstore 350,000
Income of school canteen 180,000
Salary, allowances and bonus (6,400,000)
Other operating expenses (2,600,000)
Dep’n expense – classroom (75,000)
Dep’n expense – furniture and equipment (50,000)
Taxable income P 2,105,000
Tax rate 1%
Income tax payable P 21,050
 Question 2

Tuition Fees P 9,500,000

Miscellaneous fees 1,200,000
Income from bookstore 350,000
Income of school canteen 180,000
Salary, allowances and bonus (6,400,000)
Other operating expenses (2,600,000)
Construction of additional classrooms (1,300,000)
Acquisition of furniture and equipment of library (400,000)
Taxable income P 530,000
Tax rate 1%
Income tax payable P 5,300

P5.17.
(CAPITALGAINS TAX)
CGT on Land = P1.5M x 6% P 90,000
CGT on shares = P180,000 x 15% 27,000
Total capital gains tax P 117,000

P5.18.
(CAPITAL GAINS TAX)
Sale#3; capital gain = P300,000 –
P110,000 = P190,000 CGT = P190,000 x 15% P 28,500
Sale#4; capital gain = P250,000
– P 200,000 = P50,000; CGT@
5% CGT = P50,000 x 15% 7,500
Sale#5; capital loss = P320,000 –
P 350,000 = 30,000
CGT = none 0
Total capital gains tax P 36,000