hetaratadat as eT ase eens Use the following data for the next three (3) questions: The following data were taken from the financial stalement of Chen Corporation in 2021 Philippines Abroad Gross sales 10,000,000 P5,000,000 Sales retums 200,000 Cost of goods sold 3,500,000 2,250,000 Operating expenses 2,800,000 1,100,000 Interest income from trade receivable 100,000 50,000 Interest income from BPI deposits-Phils 100,000 - Interest income from BPI deposits-USA 2 80,000 Interest income- FCDU 150,000 - Income from money market placement 200,000 100,000 Dividend income from domestic corporation 75,000 : Dividend income from resident corporation 45,000 : Dividend income from nonresident corporation - 30,000 Royalty income — in general 30,000 25,000 Royalty income - books 20,000 : Gain on sale of shares of stock of domestic corp, 420,000 held as capital asset thru local stock exchange; Selling Price-P500,000 Gain on sale of shares of stock of domestic corp. 150,000 : held as capital asset directly to @ buyer Selling Price-P650,000 Gain on sale of real property in the’Philippines 5,000,000 classified as capital asset. Cost = P4M; ZV = P&M Additional information: ‘The asset of the corporation amounted to P80,000,000. 122. How much is the income tax due and payable assuming the corporation is: oc REC a P1,674,00 2,038,500 b. 2,038,500 1,093,500 c. 1,383,750 2,161,250 d. P1,395,000 2,161,250 “> Answer: C 2CopErition, Corporations ‘© “Frign corporations ae et sujet CGT on rel propos) They ave gneraly ot atonedtoom eaperetantaPuignts Vows ern baton pues sotto suchinc any. shalbe ijt 25% REIT fr RFCs an Zee PTs MRC Domestic Comporstion. Phiiopines 10,000,000 much isthe final withholding fax on passive income assuming the corporation is: Curse a0 123 How ne a Sens asso Bec mapa es a r ; Y ; Sere eet el, ' ¢ —Fazs00 Po1250 SEES Tee tm rept & ——psas00 P52500 {tora inci fom money mat Diveiend sncomme-RFC il > Answer: 0 come UMT=DC and REC. ‘an acre oc ase ae Hivounane stares gam hw Paine pai come Teo trmestncane fen isnewrs ios aan 0 a Iomehormeaymopionet ms oo Nore srt ban PI Ne 2 RIT a aay cone G08 ‘too in gon tsi tn aba er hes ae ies USE Lr ee ened oy OC HON FF TE St 2. Royay me ered OCs FCs om ripe suns epee Umcondarrrcooe awerseerl POMBE err hon nec ennracneaskeenae ne Tea oe on Nn Sony ed oe en, aoa =a vm ‘Strcncerd abe seco 12 How chs oo pla ganar essing coats: vc come err © fem MFC 2 puzsoo — pansto aso aaa [ee Be Ge —— in oe relvastndinty i b 2 a ne corn Srapprs ht @ 562500 © P1000 «= P10,000 retorts eign-sourced Js were recoived and shal be a cy easy ape enaeneny e ema sent Answers ‘Seca anen ot ice Ee nate te sea Pron copovet oe irons ost stent os bine = s0000 199 F250 2 Renae cetera tnettegs tanita B Si encom tdci wa t= 8) SD Titecated caesar Se fe perth ae. "Seto Gan Pats=Pak_sPisnohrnan Fly eaten runes and aE Sire neo) GSTs hs b= Psnotos 1% «P2500 anes t sono, Operating expenses (2,800,000), Moves bm de she i300) Dh eet oie ‘00 Ca nea a lpn sono toe emer or ifaw oe Regul Corporate income Tx Due P2764, 260 m 273Cororation Ree = . cnt ta tb th » Secon ane i ne a mend : «eae eam sea & Answer: : jo, lon 0 Phot eter os nee Hat, on man Same weno hot be Pipes 126, Which ofthe folowing shal be considered related income of proprietary educations institions? |. Income rom ton fees and miscellaneous schoo fees | Income tom hospital where medical areduales ae trained for residency HL Income trom canten situated wtin he school campus | ncome rom bookstore stated win e schoo campus at hardy bland —§. inaan + tame: 127. Adomestc proprietary educational nstuton improved its rary facies by adding 38 \Wing ots od ibrary balding. The capital outlay on brary improvement, or ince a Purposes, may be: ‘educted at ul a the ie of competion ofthe improvement Captized or expensed ovright a the open of the school owners ‘Gaptazed and depreciated ovr the estatad eof the improvement b 4 Capialzes or expensed oughta the option of the Government Answer: B Corsorations ased on RR $2021), CREATIVE Schaal Unierety (CSU) is ¢ rong a Raa tn Sat ey» man a private domestic corporation i aint Cll uses aca yar secouning ering ly 31 ofeach yor. On Jy 31,2024, ' P18,000,00000, of which Pi0,00,000 came How much the income tax payable in 2021? ‘8. P100000 .Pt.oonq00 b. Pts0.000 4. P2s0000 & Answer: & Soto feed Uanied Goss weiss Piacoa —‘Fenentoo prs teoov0 Gas of Sarees gzomany omen “sonny Foti Paoweow — so0t00 Prono parses — {1700 _ovo0s “(noone tar Texab cone Pramod Pion 000 Prana Oreo ‘Regul Cops income Tx Due aaa Nore © CU's subject once ta the rao 1 sce its goss reome Hom uebied ‘sles Ga nat exceed 50% of he al yess cane. "2. Pioneer College, a private educatonalinsituton has presente to following data forthe year 2021: Gross income, related actives 5,000,000, ‘Gross income, unrelated aces 5000,000 {cept rnalincome) a income (ross of 5% WT) 2.000.000, Expenses, lated activites 2,000,000 nses, unrelated actives 3,000,000, hidend income from a domestic corporation 100,000 Quartery income tax paid for the st 3 quarters 500,000 How much is the income tax payable in 20217 ‘8. P700,000 © P',750,000 '. P1,180,000 @.P150,000 % Answer 8 2sCorporation SS em aoa ress rite veo Goes neue writes cows oxi) 5000000 Porc reo ies 5% WT) 2000000 Pree, Expenses, rated acs 2,000,000 Etparees rated saves Tobe rece Tovrea (uneetedincome2rete nome Tuan CoS” quay xpaynents ‘wereld ten ret econ income Ta payable NOTE. me aveted ce oe prope education i ee, ‘Sov otes tas go ncove te apucae ree x ale shal b te vena fa roe CREATE ow feet 22% of 27%. Sete Bie el cre (Fon PSM be npc rate ae 25% [DOMESTIC CORPORATIONS. Propeiy Non Pr Easaneral ton ane Hoses Tre nies apicae b cciary corer il ako sly 19 proptitay ctv ‘etanore ndPasptas whch 2 orp excet ie LOWS 1) eorgung bse naam tx he spec tx ae shal be 10% Unde CREATE ne ‘cat ie shale eaceato 1 fom ly 1, 2202 June 90 2029) Howes ‘recme norte par pups or fcion & moran SOs of igs ‘noone te vesre nasa ee appeal RTT as (epecng on te te ew bs ped ce TRAIN Lam (25) ard CREATE 25% 2% Sma (proved rete nome rat ihe tan rele ice} * TRANLoe it + cere From Jy 1.220 one 30,2023: 1% 2 iy 12028 ie “Verte tv, bas ur atar cy sea act ici ot substi {De exreme of pertrrace oe schoo spat pinay purpose eS ‘he tie ies ei came Ke val shoo spaces res “Propet etvatoal tats any shale shal bch ae aol naa ‘za acre ype eras pup anise perm Pe {Be Dearne of Edzaion Cute ad Sons (DECS), oe Comms 25 susan (CHED). er te Teenaca Eevaton and Shit Developm (FIESDA) a cane maybe, macucarce wens ews and esos 2) Weretsbecto MCT ues 43) CAPTAL EXPENONTURES tx exearson ct con es ay ttn ‘stead cad as ough enpense. This shal nla RaWeet resis 276 Corporations 1) Unde CREATE i, actor acion V2 ots raring erro 2 (med rect te wap) hoes ts ecg eames ‘nees ene n pte seer hepa pa per eaters romana © ‘it ecncat areata esteem cody sh agreecnig aera ed crt by Be Tecnica Etscaten a Si Doran’ Aaron TESON (Conmasen ca ap Etat (CHED), ta Ungar ol eo Oar) Tay of Eduestionallnsttutions nthe Philipines | propia ecacatonal + Garey 0% or el at crea cor | ttn FE) Se oe aye geen CORD) + TIN SIN CREME akertone | Geenneaatie "ritedceore' peor aed | at fone | Pen daubstng Page Coase wee or | anes 29h ean RC 8202, fr csr Santor, Nonatack ronprft + Plgpra Canton ke Se 43) ecatoral ALLREVDUES a SETS oor, erp ences Ftarons se) ‘esses on aay, aneay nd caste ees | (rouse nal es en Bad + Bxngt uc Secon 30 mR Te weg shal rete ae 2 og Ct ‘eipacioncare ene erat oor Oh Arcnsecn erat wart apres Seton 3 MRT Slowey oa flee on cat ‘cme ecwedby ban ach (Goernentexratns rete: Ripowdes tra ont cre (cn el Poe Tas SSbor Zt fb Ln Geveriect ace LGC ~The lowng ee een om pyre eel propery {ar Ornabe etatens, cnaten rants cara nectar Daten onan. ene rage wes ada ae, bugs an provers Sl. cy. deci eed ago cha eteaona ppt. Real peer x 2 oat are CT 10. Advance Leming institut, an educational non proftinsttution provided the folowing data {or2019 taxable year: Inca rom ton fees P3son.000 ‘Schoelmisoslaneus fees 1.500.000 Dividend income: onesie corpraton 2000000 Resientoreancopraton 2000.00 Rentincame rete withelding tx) 1.90000 Operating expenses 400000 mspe ncone tax payin ali 79a serrsnad © PON b prasooo = ° -AnNET ATED NCONE Renal ingore (ress TOTAL GROSS NCONE Pex Taxable ret came Tea related ncomerunrelated ico) Tarde Lass iting ta 0 rent come ‘nome Tax payable SUMARY + TRANLaE 3 CREATE 131, Using the same dean the preceding rumber and assuming the taxable year was 2 how muchis te income tax payable? . P15; 000 . Pts0,000, Pes,000 . P165.000 pnw: 8 FeLATED WOON: tore eos iba eat tseate hee rom on CREATE Fr cane eso 98 Tora Gross cone roe Tab tone vasurs nite ce ua ‘ikon Faeroe diy 0 Dee: PM 62x 1 IT On as sia aa 78 ay Edscaionlinstuon oon Jay 1, 202010 ne 30, 2008: 1% hy 1, 2038 Frod vated cones ethighe ban lad eons: 10% 10% 3500000 ‘150.000 5g0toH0 exonpt 090,000 _ 200001 7.00000 a Corporations wore 2 Under Ba CREATE on. tn reamed yee cra tom et feagneaenton werogton nant © eager a bb OK. ewe tr CREATE Gretespaalrianttn mst ogien on hy 28 tl iw 22023 ent mney eam mn a ‘SORT (Pred rtd co ger Ra ee ear) on TRaNtaw ws 3 cReaTe 1% 1% the afr the non vest ‘Nore De University is proprietary educatonalinsituion. thas the folowing selectod information for the taxable yea 2021 “Tulon fees 12,800,000 iscollanoous fees 100,000 Interest on bank deposits 12,900 Rent income 350,000 ‘Salaries and bonuses, al personnel 700,000, ‘Other operating expenses 3.500.000 Adeional information: ‘Anew school bulding was bit and fished on Apel 1, 2021 ata cost of 2,000,000 wit ‘a depreciate life of 0 years 182. Assuming the University oped to cli the cost of constuction as an outight expense, ‘the income tax payable should be: 2. P1900. F344 000 bs, 147,000 Paar 00 Answer A "ited income: Tunes preeoneoe sclareors ‘atc0)_ P14,000000 Unrated come: Particame x00 Lose Opting epeses ‘Saas on tone aperowel 7.000 Car operatg expences. ‘3500000 Coa of now baling 2060000 _ 13.00) Tonal Neticane 1950000 amet le % Income Tax DuaPayale as ore 2 CAPITAL EXPENONTURES br xara eles my rotbe pnd at fod cared a ogy epee. ms135 Assumeg te Umvesty opted to captakand he cost of lrg consttin, ten, ‘a nayabie shoud be. a Po 392.000 > P39,200 «@. P380,000 Answer: B Soteon ‘Related income: Tutor fee 12800000 Mscosoeaus fet 800.000 Unrelated income: ee come Less" Opera erpenses Saree anders. alpanomel 700000 (ine operaing expenses 3500000 Depew bling (PEMSD82) Tanaie Net Incas Taxable Net income 1 incur arr Income Tax DetPayable 134. Bahala Na Coege, 2 proprctary nonprofit educational insitusion provided the long c “pera 2000 (11,0300 cata fr 2024 Inco From ton ees 000,000 Schoo miscelaneois ees 250000 Income om canteen operations 75,000 Dvdend come fn Domeste corporation 100000 Resident foreign corporation (within) 50,000 Rent income (net) 5,700,000 Operating expenses Arson Quarterly income tax payments 20,000 The income tax payable ofthe schools: 2.37500 F280 . P968,750 4. P1.227:500, Answer: B soteon: Corsorations / TEUTED NCOME tons Paconome oe 250.000 trae tomcat cartons 1000 econo UnReLATED COME Drnnd eo fee REC: CREATE Low omgt eee ecoa000 somon0 once 125.0) Tanah Net ane SBT 000 {ROT rae CREATE Law 2% (unrated come > sted cos ae Income Tex Oo Taare ‘arty heme a payments (240.00 Wont (30,000 Income Tx Payable. 2024 rss foc the two “un eas 15.000000, iscelaneous shoolees 2500000 Operating epenses 750,000 ‘rest on bon deposits 125,000, Rentincane net cfs CWT 302500 Real elated expenses 75.000 ‘Addonal Information: ‘Tinpujoy Educational Foundabon (TEF) isa non-stock non-profit educational institution, I taste loving selected information forthe taxable year 2021 *Tuton end miscellaneous school fees are actualy, diecly, exclusively used for ‘ductal puposes TEP asels amounts to PZS0M 125, The income tax payable forthe year should be: 3. PIT 500 ©. PB5.000, b. 51250 6, 78,750 Answer: B THXABLE INCOME Rest ncone erated cee Tate at eae ‘pasate CREATE lncane Tax ue {ame as Maton (P32, S000) x 5% is Income Tax Pye 21 ‘A new school bulng was built and fished on April 1, 2021 ata cost of 2,000,000 witha depreciable le of 40 years,Copporations contnsen, aleve 0! 8 19Pcc yp, on excita ger rc I ol 8 PEC gt, atv ond excusirely used fy sth x9 nde Seton vengoanonpl eon erat HET Ae as, tne ep re ted 10 expenseg tional instution and it op Scot, meareon eh a. PIT 500 «Paso. . 51.250 4. Pare Aas tons ane weedy reenter sc iin tn eg a ton md prot es 2am com isa ko onca Soin Sate aanetsenasater dal ass waive 197. Saint Marys Univers (SMU) onsac. non oft ducaiona institon registred ancl Ege Coma Ch cp, Fae ern December 31, 202, 1 reported renal nome amouning fo BASOM fom various tenes The urea ol neal Revene (BR assassed SMU of PAM dfcenc income tax r ‘ental income earned. Is the acion of he BIR proper? 3. No bezause @ popretany educatond inition shall be subject only 10 10% reorental aporat income tax. No, because all revenues of nonstock, non-profit educatonal institution shall be exempt fom taxes and ies as org a8 ay ae used actualy, drocly ond excuse fr educabna purpose. & Yes, because leasng of prope is not cul, drecly and exclusively elated 0 eucatonal pupases Yes, because las ae the tftiood ofthe goverment and tex exemplons ae construed sin guns te taxpayer ard bea in favo he goverment Answer ABC iste nas he Tun fee acy, recy, exe wd reduce " tah ucatona purposes) papoeag OS RES (ecu, dey, eave ued or educational 5,800,000 Operating expenses lated st dbo se batch © 204 (ack epeaon onthe 18501000 Renal nome (eto CHT) es 28 OO EE Corporat ‘ons lng expenses elated rer Howat em betdepoat "aloe 2asaa0 Interest income from FCDS deposits 100,000 Dividend income roms coneste open 0,000 Dividend income rom afrigncomuraten 85,000 ‘Quarlerly income tax payments ae Ana scooby vast ay AOD Wh a Secale 5 yan Sy ie cl ‘educational institution opted to claim the cost of construction as an Outright expense, ‘The company’ asses excting and amouried a POG GOD a a ‘educational institution? a. P5000 «. P1426000 , P857,500 4. P3.289,000 Answer: B Retalincare ess) on sto Tora et icame ‘Ras t aa fame Ya ue Taste uate tx ements e000) ors Inca ToxPayase es The vier income recened fom OC and RFC exempt fom ax undor (CREATE Law ¢ 0. A nonpoft nosed education! stun i seta spec coponton Ceasequety, he ndespetangtopoprtay eter ston cal teint of capa expendues) are ret aplese 10 patch non oft dictorl states. © Trwirstiocone on onk posta FS depos a subet FT 139. How much is the income tax payable assuming ABC is @ govemment educatonal institution? a. P75,000 ©. P1135,000 . P57,500 4, P3.269,000 Answer: B © Same cmpuaten win be receding prim, "M40.How much is the income lax payable assuming ABC 1 a popilry educational instuion? ‘a. (P369,500) . P1,135000 , Pa57.500 6. P3.289000 Answer: A, 283oralions exsnoen Sa as (1aso00% rere ‘am trevor tase ‘sn000 sore ge ow cor ‘ote tre 7 : er ion te eo Servos Cetra ttn) 80 ; sa esnng A908 CPA choo? 141. How uch te eax payable ae £ eee 4. P2,652.500 © Answer D == (es revcrernaes oh 12900) eaurzse97 poo goa Fea ecw ss) (a ‘om tne re stm nan Denture ste aston Caw osmes cur eso Ir Tac Pate pa ° ACPARovew Seals cing as poptiay eduction ison. Use the felon cata or net tree (3 question: ‘Knopf domestic Rosptal hash flowing da curing the yer 2021: {rss ince ton hsp operon 2.000 Shaina wars och etn re ow pe 50,000 Fert hone of comme pc, tpl gcund far, vt of $% 19200 vetoing tas teers on ban deposit nett 20% witli tax anno Died icone fom a doves copaaion ‘0000 onal fomaten: * Addonal hospital bulding was built and fi lune cost of Aomatnwhe specs it en ne 30,2021 a2 + The company’ assets amounted 50h "42. The income tx ve ad payable in 2021 shoud be rar aie She, Shan 284 ¢ eperalions & Answor:A Goss nae tom hosel opaaton Seer tat aun Operating exposes a Depreciation expanso (500,000) (PAM 25 x 6/12) moony Tato Met aa Tatra CREATE aie Incomo Tor Dua techn Pian Soot — teeta 143, Assume the non proi hospial opted ages rasp. Telnet dead pete cise MM set 2. P6200 . P162000| be. P 152,000 «6, PA 000 Answer: A 0 Sdon= sane wi enna pesdg ter © The pinto ee cp rere ep apt egos plc epoca eas eaten ‘44, Assume the hospital was organized for prof, teincome ox sl dv and payable n 2020 2. P280,000, «. P96,000, . P300.000, 4. P4t5.000, Answer: ¢ ‘Solution: Gross income fom Posptalopeaton —P2000000 ‘Rent income (P19, 00095%) 200000 ‘Operating expenses sna) Depreciation expense an Table Net Income Pisco xTaxrle it Income Tx Ove 000 ess: CHT on rent Inca Tax Payable e500 a Seton 716) Tx cae one ne CREATE vi Fen ee etn RESTA wie MMRDA ox aor eeu tw) Se anes ane EET aE Fea a eet ove hog 205Corporations oy error USO Ras AEDT Papen Nor tea oS: i sci ong on cao asset 80810 OF Beals ny a ee onda pect gece et 6 API agg acne RS el ae nao PoP hewn Fe te event RT ale 20% 25% omoer oe peo apes tas aces ose sg tpl oe nao, 1 Gent on ale tu acre some dsr PEO aa a oso, al fr ued ails, poured P5000 cara er ei ae abe ers, expect Wn TE ae of P18.00,00. How much isthe income tax due assuring the treble year is 20212 a. PIT. 500 ,P35,000 251250 4. P4.t87,500, Answer D Fed Uneated Total Gosssoks Prgoeao00 —P1g00n000 —P23.00q 00, Cost sts (5.004 t. (Ges eare Faas Fisasaae Fz 00007 Pex a Taub tbrone Peo) —Prigoapod P6750 warms Income Tar Dae anit The hast uta 25% RCIT se ts gos ooma frm une ‘cies mor tan 0% cal goss inca, 145. The Royale At Corporations an ilematonal crit doing business inthe Philips. ‘arable base forincoe tax purposes is— Gross PhippneBilegs Gross Pippine Bling minus deduce ex Regular ate o 30% fis netarbieineame ‘Alocaiton ofincome om sores wan and wihoutthe Philippines, as wel expenses, © Answer: Corporations Esra ome Oia th teem tg fon ot Fam Senne oes be Perego o rool acan PP psn aig fam he Pipes bit see dome ol Php cee rgig fm cite PDN Brg” come ax purposes an Answer B 148. node fran interationa cairo quay for exempon cn ‘ype ol tax shal be exempted as wel by heishomecomny? tem wat 2, Incomo tax b. Business Tax ©. Transfer tax 4. Anyofthe choices © Anbwer: A Uso next our (8 quesions: Pac Aries, an interational ir cai showod te flowing goss recep for 2020: ‘aiff Onin Destnaion Goss recess Philippines USA 6,000,000, USA UK 4,000,000 Usa Philipines 3750000 r Phiigrines 23100000 ‘Attia information: "Forty percent (40%) ofthe stgment fom the Phipies tothe Uned States were leer shipped to te United Kingdom * 25% ofl ts revenues wore tom transport of cargoes and goods. "4. Tho Income tax payable for 2020 is a. P127 500, . PI70000 , P150,000 . P200.000 Answer: D; (income TacPaytie= P1258) {80 The ota tax eponseof Pai ies ine hippies 2020's 2. P187.500 . P230,000, . Pat0|o00 i, P260}000 Answer: D paw 25%) (ah x) =P One re P22 ales eC coe cine rent ch ene 27Corporation, an expat rte asin Pippin caries 0 USA. af suc ey Income are awe b, P80.000 ¢. P200,000 ; 2 me sant 452 The woe tnx pyar 2018 asin Pspine carers U.S.A. ae exon fen ae aa TRime Re lnm a scm asa tin poe a Reweivmescenee ina ‘Acar fr cargoes from China o Philippines ae ‘Afar for cargoes fom Phippnes to China How much was the income tx payable? ‘2 P33,000, «P7000 , Pa0.000, 4. 64,000 Answer: Solder Passengers afer fom Pipes 'o China PY,50,000 ‘ifr cargos om Piast China _1.300.00 Ta! an 00 TocRaa 25% fname ax Dae Payable 70,000 ‘154. Based on the preceding number, how much was te common caries tax forthe yea"? 2. P3000 «. P7O000 0,000, 4. P4000 & Anewer: A ‘Arta br cares tom Phipinsio Chinn P,300,600 2 Buss tart (xmmon cai tan) Ea Income Tx Ove ad Payabe. 7000 © Common carters tax (CCT) for international carers | isa business Scene Ct ramen CT asl O87 frees on wage of "goats, carpous or mals” ongeaing * 288 c Pepporaions EEE 155. ¥hich of the folowing shall pay a tax often 1- Regional or area headquarters |= Regional operating headquarters Percent (10%) of hei taxable income? a. only 6. Bot! and b. only 4. Neier nat Answer: B 456, (Based on RR 5.2021 lustaton) XYZ Corporation is registered as a Heed Quarter (ROH) since 2015. For tab 35a Repeal Opaatng ‘the financial results: Years 2020 to 2023, ts operation showed mm mt Gross receipts 73M ‘10M 130M 7M Costet services ‘25M GM ris ata Atowabededucions — S3825M@ = 42M ARSE a5 125M How much isthe income tax ue in 20297 2 PO © P05 280, P337500 4. PsT5.000 © Answer: © seen wo teat Gross opt saan 12000000 rw.tdoe~ 78000000 Coatelserices (250000) BoM) (7SoRem) 41250000) Grossincome —-PIAISKOND PstanLaND PKAAWO PR17S0.000 Allowable dedicons (20825000) (41200000 _ (4285000) _ (25 12500) ‘Net TarableIncome — PY24 000 P2e000m0 15382000 (P1.375.00) ie oie mmm rear pale prem r— a 585,000 ze 1% mae! saa eee Pas97 500 P6250 WNCOME Tax DUE — Przsoqa00 Pri 80 tasay 1,202 for ROHO. It we a0 | npn eee ia = acpl te rom eee oC ca cmcnane mana mam ier cman ew oa eae neem umnCorberations Jf opsness ne Pipes 9808p 157 Ten You Cp spaene CoP Ng ss © Supt FAY I. 8 Pipe Cae? et recene erat wl apply tothe rental payments to the lessor 2s Sascreoe Ta 3s Fra nrg Tet 75 al Wining Ta 155 Frat Weoting Tat Answer D 158 ert char and ee fs dened by a nance lessor fara, machine ‘exaherequpent ine Piganes sa beset tx & Toeme rece N) en and neta DaTeN Four entar pont solos re orfens 4 Twoandoneha porcent(2 8) ofa came Answer B 158.A cinematographic fim oan, lessor or distur shall pay a tax, based on ts gross ‘noome trom all sources within fe Philippines, of “Twenty-five percent 25%) Seven aed cea prot (78) Four and onal percent (4) of gross rental or fees “Two and oneal percent (2%) of gos income aoce * Answer: A IOFFSHORE BANKING UNITS (OBUs) 160, A branch subsidiary or fit of eign bantng crpraton which is duly authored by the Bangto Senta ng Pinas (8SP) i ensac ofstere banking busines in fe Pripoinesinaoordance wine provsonsofP D No. 084 a implemented by C8 (1 BSP) Cet No. 1388, 25 amended . Ofshorebnkirg unt .Mutnatona company €_Petolaum Sence Contacte and Subeotacor 4. None ofthe chices Answer A 161. Piro CREATE Law Ost Borkig Unis (05s) atx expt ninco deed |. Forégn cueny tensa who commer bank IN Fen curencyransacion wth branches oforign banks authorized by Interest income dened rom oegn currency loans granted to residents. 20 & Answor: 9 OBUsarenet pec ceerstans 0 Thaprorsons prang 00 mea entre ven esl totale ee TE Lan Cesta, ‘Of CREATE law. rene "fede fren cupeaton upon eflocivty ane esc bk ons Salone rio" "2 C8) on cmc ascot y conmesersty Tran UTS va vat Te nw ons one ‘cr Crotcomnectsons Et fer Sorcecotirgriots EN fen er esc = fen © Shc Se. 24)4) ofa Tax Cod was tt repeat CREATE. Ths bo ‘pu ncome a rll 2% ings ee og coprstors Salted © O8Usshot as be sutjectio abe tes pose wb Tr Coe (© Porto amininantunder CREATE La, an U am mae an tom cueney wansacirs wilt sujet bse ame GO ROT eM whichever sigh). Under CREATE La, O5Us a be abet 25 Mt on fs ovdnary income. 162. A depository bank under Foreign Cutency Deposit System haste fovng come om foreign cutency transactions in 2019 (xchange Rae $1245) From Nonresidents ‘$5.00 From residents $3,000 From Prilppine Natonal Bank $2000 How much isthe fal withholding tx onthe above income? 2. PO P1300 ', P9000 . P2500 Answer: Frcs $3,000 P45 106 = P13,500 PRIOR TO CREATE Law, name dere ya eset bak om ts FDS ansaesons ‘maybe ax expose to 10% FT 2 nS FROM ITS FCDS TRANSACTION TH sons ‘Noein (BU nme Prganes come ‘Loca comma bens ont ‘Branches ef eri banks i From be resets 21Cale ations umber an assume further tat the taxable ye, 169, Asume sae dtain eee aus, arse mourg xno i «roa b, P9,000 4, P22,500 Awe eq cram tse oe a toy Sees 164. An offshore banking uni, aeady ins BP year of operators in the Philopines, has he folowing dala ints nooo and expenses forthe yeat 2021: Foreign cureny ransactons wit Nonresdens 4.800000 Local banks 41200000 Branches ofoegn banks ‘900000 ‘Anihar OBU 500.00 Other residents 00000 onier Noowe Rent ote *en0900 Nceloeois eae sono Opsrag Expenses rom Ho mach theft! income tax te year? a. PO P2250 e000 4. Pa72.500 © Answor:D Souter: Income tom FCDS wants cot (OTHER INCOME: eva rc ane ce e.sonmo cone (2.3m) Tama et gaaem Ro P4a20000 254) Mor e.son000% 9) ‘coe Tx Due igh anon) 105000 atoo0 22 Porations pene 13) questions are he ey coporaion roid the cloning dace rei 1 afr alot yearend December 31, ions 10s Income Paooom =a Deductions Pes00000 Siem, reaon $3000 anal ea: Assume he corporation ot cashed as MSE {i.e corparaton a domestic eoeratn nae gables a. P537,500 ‘¢. P750,000 Leta b. 67 500 4. e250 Answer: A Philognas Abroad Te Gos come aceon Peotaiso arn Deductions * 2.$00. 750 3.250.000 Tar atone Pismnd— Pe400) Pe soy Trove ae tea TaxDue _—. {ess INCOME TAX CREDIT Aci payment rsaaoo (aon Peo tims 230278087509 sre Alowod (Jomer) 150,000) nce Tar aye. PD > ywocaicaTaccreor? Meet taone ec tome eaton © Avounr oeoucriate ‘The LOWER eben Actuals pa ab nt he Lint. © uw: Owpetcano mary an cut nae 0 On on on county sad - Retin ‘e_Pigpre nee Naina, wot + F Mere man oe fi sates ave Th Kt Be a ete Lin nt cpt astons rr (ea retro was ea 20) ars or Fi Caney - Nati, td . Lar 2erB raul ALL rience OND aay Nelo, a in ts Netnae wsSr oral balks bert rpg 166. Based an the preceding rer bu be COMPANY APE Tr should be: Seo Sons gesecre ene Sana Be oe H oom ARE el Ondo (2,500,000) y*_ 3.400.000 Fee AS Pon ra a eee a — a OPE = PEON? 1000 = FSTBTO™ £5 eters anata e eid ram Be bre aoe Fn pee 9s 0°0 be pion tare 2 hour toccndreapiceey oRs ar Dos Cott eb ea pyaar stax edt 167. te corporations resident corporations income ax payable is: 280000 P8000 >. Pa75000 on) & Answer: B Phones Gossiname 4000.0 Deducions 0 Taraberetincane PISMO xTaxRate 24 Income Tax OvaPajatle PIE 15 Oly Acs ad Ds enero imame tax con nome taxpayers 18. the corration i non-esident ign corporation ils income taxis .P#,000000 €. Pe0,000 » Pi.ze0,000 4 Ptatn00 Answer: A Pitas Goss iname rTarRate aa 255 ine Tx ‘DvaPayate Pr oona00 168.1 coperaton a resent > enone entre san tec pron 3 Piso © momca a Corsorations soln ss heen Figo Torta gee inom TeOaPoatie — Pra 1 he capo i 19nd em x: 2.P1,000000, . anooen > P100000 apie Answers A Soto rs ame Fn Tarte 2 Income Tar DnPayabe PFDOHOOT 171. the corporation i nonresident lessor of vessel. sincame ax payables: a Pt00,000 ©. P300,000 bPrao,o00 4.28000 Answer: B Grass income Pcon00 Tax ale 45% ‘ncame Tax unPayetlo — PIB) 172. the corporation isa non-esident lessor of ara, machineries and equmant its Income tax payables: a P100000 .P00.000 bP iB0,000 4.28000 Answer ¢ Gross nae ‘eqg00000 xTarPale 75% Incame Tax OuePyeto — POLIO. 1731 corporations proprietary educational instuton since tax payable is a P2500 « Pao b Prs.000 4 Fag Answer: B 295,Copporations Abroad Total Bes A moll _2smooy___(3000__ 3250000, 508,000 71,280,000 P2754.000. Pezsn0% % PET tone frie None TAKCREDT nn emer 2500 Moree a Inne TP Psa wich uses a is {74 conraton 2 rons alt tual inten Teeter ens od art pues since taxis 2. P2000 » 730,000 4. P64000 © Answer: A 175 he csporaton sa govermesteucatonal into which uses alls revenues or ‘neome fr educational purposes, rcome taxis: a PO c. P120,000, Prom 4 P4000 © Answer A 176. Ifthe corporation is @ non-profit hospital, its income tax payable is: a Piz Piaogd &—PIs00 ee) Answer: B; same uname wins poitry educator inst. 17. coperaten i replonal operating madquaes, le erin rating acute shame tx pate is 2 Pa50.000 4.526000 & Answers Gras rie Pomoc Ordetes stony Taste tice ~Bistagy TarRate ie Ince Tx OPobe Fn Coy erations REGIONAL OPERATING HEADQUARTERS. (ROHQs) CREATE LAW Th 10h lot os pg ina Rv) cep 4 ROHOS shat no anger be anced paca copes an hl te Sede regan conan fee ustke an orénayresdent lrg capecon RAEN 178. Wich ofthe folowing statements conec? ‘Any oft rei bya branch fice oa miso copoaon : isubeto 15% ialtox based onl pres spied or eomaie frente without deduction forthe tx component. 8 Branch pot for puposesof ranch renitance tox hal include inert, chiens, rents, royals, indusing remuneration fo: techie services. sala, wages premiums, amnies, emoluments or ober ued a eetemingte snus, pods ot casual gains, rofis, income and coptal as recaved dug each rable yar om allsouces within he Pilpines Fer purposes of branch prot emitanc, income tems wich ae not efctrey cenmected wih the conduet of is tade or bsness inte Phipps a not considered branch prs. 4 Abotthe above Answer: D ‘179.1 & branch ofa foreign oop. in te Philipines rem pasie income earned inthe Priippines to the head ofce, whats the appicabie axon he said vansacton? ‘2. Subject to 30% na wating tax b, Subject to 12% creditable witolding VAT © Subject to 15% branch prof renitanes tax 4. Exempt from branch pot emitances tax Answer: D pupotes of bach pro ret, come fens when a et fit, + Fe of tanh got etn, wi Coesed th he cndet esas ruses nie Pigs rt concand brane pas 27Corporations Se opes it oer acetyl game Ovidend income, don ‘income ‘rom bank corporation deposits Yes a Yes id a No. ee & 2 Yes No : We oe a * Isimpasedin the nat ofa penalty othe corporation to prevent the schene of accumulating inome rater than dsibute the same to be stoctholars forthe purpose of aiding tax on civdnds. ‘Minimum coor income tax 1. Optional copra income tax © Improperly accumulated earings tax Capital gans tx 181. Por CREATEIew, Answer: ¢ 182. The inpropery Accumulated Eamings Tax (nr lo CREATE lew) shall ot apply tothe following, except? és ‘8 Banks and chor non-bank anc iirmedires Insurance companies Pubicl-eld corporation (sal. corporation & Answer: D 183. is @ tas! used in determining the reasonable needs of a business to jusiy the accumulation of earnings which wil exempt the corporation from paying Imprope accurate earings tx (ero CREATE Ugngy est bImmediagy est © Reasorabe needs lst 4 Contltest & Anuwor:B ee Corporations yp ia ale ee anton ration, 8 domestic corporation Ceara Peron ae ong dt 2019 aya (Cos of goods sold he General seling and adinsrave expenses ae sre nae fon Pipes Renalincome net oS mtr Duden nce om does oxpertn From eet een cen Capa gs tom sal deve see sone sn anety bee rm Do ede and pa aig beer sam Feta eaigs, 251016 Te ParVaweotousaeg shes, zovaoy 1288 open br hare nteparcor 0 1b. How och he name inc poate e208? © PSI anol bpsroag Gage nsw Sin sso Fo oe aay ‘en nano eae a Coty ans Comal singe inntinoomes “aah Taxable Net Income P2780000 x — come Tax Ove Pazs000 Loss: CWT on rental income — 110.000) {come Tax Payable — Pats 000 +185. How much is the Improperty accumulated earings tax? 2 P cruiers 5 Plonas eras © brewee om pet se ne ™ “Taxabio nal vicame on Feet pos emt se inns ton 6 Be lr eum om ‘Income subject to CGT roms Tora. 29“S (£25009) ecm amt tape ed renee 230) carpets 8 2 ‘can veto 28) ‘sam000) ‘“ 00000 eons wes Sg (Bare ret acart eS rues ae? ar io ries. 196 Usng the same deta nthe preceding number and assuming further ha he taxable year 182021, how muchis the mpropety aonrrlated eamings ax? 2 PO P212875 P108.125, a. P2865, © Answer A TAET ong pesca OREAT FR S221 poesia he epopEysoomused eaiegs a sha no eget be ‘mpsad on cameron une aecity ofte CREATE onwards This hal {Sine ert ante yr roa yeastnale yeas erg al he tec CREATE 167 (Based on ilustraton for RR 52021). JDS Corporaton, a domestic corporation, has inappropriate retaned earings excess of ts pad.up capital slock amounting 10 29,000,000 and 50,000,000 of me fiscal yeas ending June 30,2020 and June, 2021, respectvey. Which ofthe folowng satemenisis corec? a > DS Capon hae sto he mapa azure earings at 108 Coporsten sta besten tte 10% mpropety scours earings ax ca year ening une 90. 202 and Je 30,2021. DS Conon tale sito he 105 ope scamdse eons year eng June 30,2120 and om Jy 1, 2020 oreo Searing Ane 3 2 iy 1,220 upto Ape 10,202 None oft steve & Answer: A + RRS2I21 poses tate pope ecm ” Scum earings ax sl 0 fn ‘pied on cxraons zs tw tectiy o teCREATE crs. This hal aPPY {othe ene usable year fora acl yarsarabie years ending afer nee CREATE ‘Hower 105 Copzaton sh no ge be se! fee ‘east canogs as er a Seas caesar ee ia rang re 0 2, wi 300 PART 5 Lurtuershi partnership Defined ‘Nt. 1767 of the New Civil Cade defined pares as“ contract whereby {oor more persns bind tenses to conte mongn seg ne conmon tnd, with the intention of dng he pls aions see ‘more persons may ao fom 9 panna rhe ereseeoctner Partnership has a uridcal personaly separate and dete from hat of each cf the partners. Te may be constituted in any frm, exces where immovable property (or real rights are contributed thereto, im whin cace'a pubic insument sel necessary. For taxation purposes, Partners s general taxable as corporation under Section 22 ofthe Tax Code, as mended. Sec Dole Tx Coa mr woes ‘CORPORATION SHALL INCLUDE: 4)» Ore PesenCopmatns (Cs ‘Partners no mater how crated or organic: ut does NOTINCLUDE ‘Genera poesia prs Deere eee tele ntrcepned bes 2 Cimson s & Sosper atin ot uoealncobr ee ton oma fg con apenas CE wh ser 301Lurtuershes / INDS OF PARTNERSHIP 1) Genera Protest Parterstips (PP) speedy ed 6 py ee pene rie 2 0 (Eee, sre nT ans et ann hn Sh to enannd conta ee oso wom et 1 a ga Te yr amet ee Pfc cen MP2 ec a taxed to the partners comprising wt (RR 8-2018) nds Scion fhe Tax Cae and prtent revenge, 2 cor ee eo oeequenty wo cedtate willing tx Sr ot a ce re Uh rose of ung ene re exh pres nthe nce he pep ln a Seis val zoe tox Tur. or coe a a cha sal compte he SMe Mane 23 Se re oe, mower, Ui te exaTALaN of GPP sat Sora wk oory nie, GP issue to fal oles Pease paste enmes 5 wel af apa sons appleabe PARTNERS OF GPP “Toe Partners shall be lable for income tax only on their separate and inciwaval capocies. Each partner shal report 25 of0ss Income his or her ‘dsrbutve share (actual or consuctne) in the net income of the partners Tncome payments made peneccaly or atthe end ofthe taxable year made by 2 (GPP ta the parners, such as drawings, advances, sharngs, alowaneces, tpents, ec, is subject to ceetablewithoing tax as fllons: (CWC Rate (88 11-2018) Not more than 720,000; 10% Wore than P720,000 15% DISTRIBUTIVE SHARE OF THE PARTNERS, For purposes of computing the distributive share ofthe parters, the net incom of te parnehip shal be computed inthe same manner as a ——Ft.conmaD ‘tonal dousions _ onan) Naticone-GPP Pena ; or ie i Share in Income —Psaga “Toll Osubudle care oe GPF ‘Sone Profan Lee ‘Taal Dstrule share Parner ‘Sample Computation ofa Partners arable Netincone: Coss compnssbn care (3) anna Goss sess icone (a) 2400500 ‘weds cesctons tem gossbusessixame (120000 Sarin the et cane oe G2P™™ 0 Barner’ Taxable Net income mano NOTE: “The oterncomesgsse nones sete FT ad capa gans subject) 8 GPP as shown ator ae noticed the carp a Poros ae ne because tose ncomes wee aad ste io er nal ald ase passe nas capa gain ax. Onl he BOR 100 sare 2 GPs rea Fam operons Sal beled inte came tax toa pare. 2) Taxable Partnerships Partnerships (other than general professionel partnerships, whether registered or not, for income taxation purposes are considered as corporations and are therefore taxed as such. —Consequenth, partners are considered Shareholder, and therefore, profs detrtuted to them are considered as {vidends subject final withholding tax. Geng fata, the share ofa partner inthe net income ofa partnership subject totax sno retain Ue partner's Pereanal income tax return, —Dstvoutive Share © equal to each partners Astute share ofthe net income dared by the partnership fra table year net of tax. TyPES: are assimilated General Co-Partnerships ~ are partnerships, which by. la are, ss ‘within tne context of, and so legal contemplate 35 corporation + Unregistered business partnersins + Unregistered joint ventures 303?, a 2 ‘tnershiy Compton te Stam nent ican of GveatCammeri axbl Parra cc Om ‘Abate caucinsoneaing Pests te) | Nathcane 3 Lees: Corporat Tox fs Netinane ater cope ox * ‘M64 Visser abet feats (el) Cataract OT (ot) DSTRBUTARE NOONE te Farrestip Pox Xtand tos Poewge cope | DISTRIBUTIVE SHARE of parer Par | at Seng ne [SAMPLE COMPUTATION OF A PARTNER'S DISTRIBUTE SHARE IN THE NET INCOME OF A Gp: ere Ts Grossheone-GP PLONOON ‘Mowat cottons _ 40,000. Netiname cP enor Ror 100 Netincome after Tax #20000 80,000 p2n.000 xPatrors PAL % 55, 50% ‘Share income. -Pef, 000 Fa 00, ,000 "A Gerral Parnerip 6 So RIT or TT, Noche Se “Totten ote scp" asx | "Toa Osrbuive sae ofa Pane. The pana share is ete as dvidend icone om domestic comoration hee, sijca eal weotag tax on iden neon Consent, Ps aro sta NOT be eed ne Pate TR, Sample Computation ofa Parttr's Table Net income: ‘Gross compensation income (an) e000 Gross busness noone 24000000 ‘Alowable deducions fom gossbusness came (1.20000), Share nthe Nl ince ofa GP Parne’s Taxable Net income 304 +The share in the net income of et Lartrershgs ea - faeries meen tere Se ten tere a ee etapa mk In computing table ince ded ape Amer, he ftoning ry be howe ace TO cat, 2 Romie expenses wach ae ordnance fr he pace of rete ae” ESN, re rm '. Optional standare Dedetien (050, the parmestip, cual o contre seceved, shal be reprted as ale cone ef isc pte ee comprising the GP can to ge cm father sooo "hen her disrbsve sae in the et come oe GP env stor ek 6f the 6% income fx fat ctor sce error sho ow ta oP is akeady net of cot and epee, If the partner also derives other income rom trade, bushess or racic of Profession apart and din rom he share nthe ntincome ofthe GP, the deduction that can be climed from the ater income would eer be the itemized deductions oF OSD. 305Partners “yp 7 Choose elt of the caret answer. ih w vooa yemerttnca rere sa Mo © epee ta ch Se ct ee ; Sie Answer: 2. Agent poss! aes een fom none a, buts gute fn tone arton 2. Gente fet cee peti wi ess ino he me x remote pees Beene alee eames ein hen rota, & Noveo nestor Answer:B 3. For purposes of taratonparershipis Classified into two major calogois, parrship in tade and gener rolessina partershi. 1. Patesshipin wade seated as corporal taxpayer. "WL Genera profession parership is exempt fom income tax 2. Llland il ¢ Landillony land ony 6. tony Answers 4 Sateen: Al pater stated ine sane mane ax carrion Sune 2: The neon agonal conneral prversip so sje o NOI Regular Carte cone Taxwnchvrs tcc 2 Stlonatst 2a fase 9. Slener is us bul stoner 2s ake Salome le butsomen sans 4. Statements tad ane Answer ¢ Partner 5 mediate Apter share in he net pots ef 5 rented em + Sheet naceneens nS subject tincoe tax real proessoral panersip snot Answer: A 4 Ataaleparnersip maybe sbjet fe owing nes: 1. Minimum corporate income ax IL Regular corporate ince tox I, Impropery accumu earings tx 2 Lllerdit Tandiony fe landitcny 6, leny Answer: B 1. Which of he flowing statements is incase? ‘2. A general pernershipin adeno taxable as a cuporafon b. Aoi verture for undertaking constuction projec is ol taxable as a ceporaton ©. A consortium fo energy operation pursuant to an operating cneoium agreement under @ sence contract by he governments ol laxabe 2 a corporation, 4. Aco-ownership where the acties ofthe co-owners aed to tha prakeaton of preperty and ealacin ofincome om he propery iat taxabe as comport, Answer: & When ter parents dd, Romeo and Junaid fe (9 ec fn in sea ‘They decides to invest caital and developed the end info a subdhison wih smal lots berg sadelter nine oak 1: Have they formed an unregistered panes set Ok: Ashe sect fn anon Herepcretaen eae dt partes? 3. Yes, No . Yes, Yes b. No, Yes 4. No\No Answers ’ (© Thepatnestip is a prairie of anmen praeo, tus, dassted oer ptr. cae renner seme, She SiSetupemestpoemmwesponer ioscan on Berets coptin Coma. np ea omer bash mer rexel ane 307a 10 tt Partrerhy ty A i aes : is * SS nun mymcnimetereath ste caves hay hve erent poesons, “Salomon! 1. & Patra of @ GPP sno require tind in his personal goss income tis share ine distal income of he GPP ‘Statement 2 Corporations may frm a taxable parership but nota GPP. ‘Statements 1 8 2are fe Statement 1 istue but setement 21s fse ‘Statement fle bat statorent 2s tue Statements 1 and 2 ae ine & Answer: A © Sttoment ts false. Sharintbe ince ofa GPP is a returabl income erdary neome which sabe ined nthe parner’s TR. © Pamerspis aca ts peed tough reeting ofthe minds ‘Consequerty, crpraons acter jul persons canot fom aparnesip beens ey a pao gg so Hove, cal Per ay aja ventur ‘Statement 1: The distbutve shar of pare inthe net income ofa taxable partership sequal io each pane’ istibuve share of the net income decaed by the ‘athersip ora taxable year afr deducting the coresponcing corporate tax ‘Statement 2: M2 taxable partnership sustains et operating lss, the partners shall be ented to deduct er respective shares inthe net operating los fam thee indivi (y0ss income. 2. Statements 1 & 2 ae false Statement is tue bu statement 2 false & Staten 1s fise but stalement 2s tue 6 Statements and 2 are tue & Anewor 8 9 Sate. Soe patria at, boca sar delta nea tr oun eg copeae oe Be {Sater Una a grr panera erent pater 2 Deters share interna rs GPP ced neo ‘none tbe ptr Partnership 2. Sidomet Fr poset aap te de vi proesra prea eneloop FTES ta ee anor as corto sip sal teamed ae Satoment 2: Parnesof tarde pers dite io thomby he parmesan ance 4 Slotoments 1&2 ale i 2 Stlement 1 stu bul stoner 2 ae © Sllonent ele but stom pe Statement ard2 arte 2 sharers and ends aa 4 Answer: D 1%, The partner’ share inthe pois of» general pression received by the partners although not: ‘partnership ts regarded as Cader fx Case oumag 2 SSP Ths rg treme peg 2 names eptginane 2. Anza bal of repring inane Consucive ect beset epring xane Syst metodo ong nae Answer: ¢ 14, Statement 1: Ifthe amount io be dstitutedto a ptrerofa GPP is more thon P720,000, itis subject to 15% creditable wihtoldg tan, Statement 2: The share of a pater in & GPP subj to fal willing tx of 1% if ‘he amounts below P720,000. {Semon 3: The cb sae fs pater na connec parent tetio tax 2. Statements 1,2 and 3 are false b. Only statoment 3s false © Only statement 2s false 4. Statements 1,2 and 3 ae tue Answer ¢ 15. Statement {: A GPP shall no be subject income Tax. 2: Income payments to aGPP shal be considered exept rom tld tx. 2. Statements 18 2 are fase . Statement is tue tut statmert 2 fe ©. Statement tis false but statment 26 rue 4. Slatemens 4 and 2 arene & Answor:DPartuershes / 16. Which of he fog ops caret? Patofdistibutable —Retunable — Subjec to ieconeolthe incomoatthe City i anit ‘SHARE INTHE INCOME OF - Ean arcade com UOC oie ee Ue Fen Yes No No 4. Fromits tax exempt income & Answer: 1 Aisncoest. Shaw acon to GPP operations sbjecto CWT. © -Bisiooect. Share tom ne GPP passive camels non-etumablelacome of theater 9 ‘Cle cored, Shae n GPP call guns subject to CGT is pat of he nal incone be pater. 17, Which of he flloving tons is corect? Partof distributable Retumable Satjectio. income ofthe incomeofthe FAT pariner partner ‘SHARE IN THE INCONE OF ‘COMMERCIAL PARTNERSHIP: ‘From ts operations Yes No No b. Fromits passe income Yes No ‘Ne ‘& From ts capital gains subject to No No to cr d_Fromits tex exempt income Yes No ‘a © Answer: B © ‘isincored. San neone om GP's operates is ube FUT. {Sisicorec Sharm te GP's capal gains sujet to CGT shale pata the dba ine and sol bo elo FW © ‘Dshcamect sha sujet FWT 18. Saumon tT sar oli pater in te goss name ofthe GPP is aed tis ‘own gos in ‘Statoment 2 The share of he prinein the of Se maz 7 et nome ofa GPPis aso considered 2 Salements 1 & 2a fase . Slatement ts ue ba statement 2s a © Siena tsisbebtstonen ze 6. Slalemens 1nd 2 are te 310 4 Answer B 0° Sian came 2 > seo ay xe Staton icone ea Giese ssa subedtoa tra wnvasne 18, Salonen | Coowneshi and ates 2 snr as aby, ‘Siatement 2 Corporations and ordinary penne a Slalomenis 1 and 2a fase nse tay, 1. Sialement 1 i tu bu statement 2s fase ©. Sialement 1 is false but statement 2s tue 4. Statements 1 and 2a ie Answer: Siemens ae. Cocmos sna tea pate eo taxable as corporation, To Ene Statens te. Ora pater prayer ame ‘taxation purposes, is taxable as 3 corporation iii ‘20, Stetoment {: Under RA10863, an individual pre ofa GPP apphng optional standard educton isnot alowed for any deducien on hs distbtve shares, ‘Statement 2: Under RA10963, an ndvidal pare ofa GPP may avaof 8% taxon his Par0.000 P1305 000 Answer A 28, How muchisthe income tax due of Mr. Daz? 2. P85.250 ©, P26 250, > 130.00 3. 321.250 Answer: ¢ ‘Shan datutve prt (P3000 25%) Tax ‘on P6000 130,000 Inexces cf 80000. (1.087800 60000 30%) 6,250 ‘Aeticone fer dserbton opens P16 250 © negates are slowed cin ute des tom Hs rte Se ‘ron sare aera cas are ners (RR 8208). © Te purrs ret loved naa en heme tac le opto net ae faGPPsareoy ml mse angers TEES 25. Ms Realis a pater of RPT Parversip, a general profesional partnership, and ons 25% intrest, The goss receipts of the Pertnershipamaunted to P 10,000,000 for taxable year 2021. The ecard ost service and oprang expenses were P2.750,000 at ¥.500,.000respectly. How much the net came for dlbuon to parners? 2. P2730000 © PA0.000 F2200000 4. P57e0000 & Answer D rs cite Less: Cost sancas il Sess iname —eisca ess OPE tame) P7200 Wm trey — Ht 32 Cartwership © Hsien asuno the wea tena cect 1, How machi the income tax due ofthe Patni? ‘a PO © Pt.067 500 », P7000 6 P1305c00 Answer: A 27, Haw much the income tax due of, Real? ‘2, P86.250 © P6250, . 130,000 4. Pa21250 4 Answer:D ‘Shawn csv pot. (57500003254) _ 497500 Tar Due oe ‘On Pana. 000 rsaoeo Inexcess ef 209000, (P1497 500-8020 38) 12120 ‘Netcom for dst fo partners Para vi prose ot atone am se econ om sie tre ne esa led as ard enpeoes RIS, (©The parr arom al o eB eae ce a stare fom GPP ie rea) ood se ese. 2%. Statement f: A general professional parnershipisexemp rom income tx. ‘Statement 2: A generl profesional partnerships exempl fom business ax. ‘a. Only slatement tis comet , Only statement 2is crest Both statements are coect 4. Both statements are incorect + ‘Answer: A. 28, Starnn:indvvalparnri ct stoned dan rb etrontomis he ‘share since this is already net of cost and expenses. kc ‘Stomat2Apatrr rot slowest opoe se distributive share from GPP is alteady net of cost and expenses. 2 On sent sere 2. On sleet 2s cone © oh siemens are caret 4 Bot satemens te neaect Answer: ¢ 33Partrerdig Taye Eich toast Seana rete nten eden ee 3 Rene ae ee foe oem ecm Be Si oe 3062310 we P7.2s0000 2 psaar 00 4. 2250000 Snowe ose nents zson0000 Lass: Cast of servioes —£12,500,000)_ Gees come Pres0.00 on asa Rete P7000 Lass ROT (CREATE Low) @ 25% 1912200) Net income fr dstbuton fo partners — P5437 500- (The ROI ene apt drt CREATE low shout b8 25% stead of 20% fr US ese ent ee arse esha, 00.00. 31. How muchis he stare in income of Mr. Reyes? 2 PO ©. PA718780 b PI3soars 5437 500 Answer: ¢ 9 Share in cst rot (549750 50%) =P2718,760 ‘32. How much should te wield by te Parnerstpin the share in income of Mr. Reyes? 2 PO © POT1875 b 135.938 6. 543,750 Answer: ©The share in incom of Mr. Reyes fom the gneral partners, actualy oF tiny rece tated as den came rom a domaste copra” ‘sect 10% ina aioli eon pase neue , 533 How much the income tax payable of Mr. Reyes? 2 PO © PZ B75 b. P135.998 6. P513.750 Answer: ©The star lt pater ent ncn et reams te GPis mate as denne, sui acon ts AE ey ecm rym ‘poten arog ltie const fa pymet fe 40 34 Partnership EN the 134, The income tax due ofthe partnership shoud be: i Peso = eto paver cet daw fice apm ferayraea lary 7H orem 59) cms ‘Income Tax Due (higher) Pa Tso © Fer tna purposes, Pater vases ey Gal Parse (C2) 5 foxable as onary domstecpaneon (See. 72 Tex Co 8 arene), CConsequety i ao abes n MET © Athough he esas ce Pater aot mean be P100000000 rest tho apptcable ROT rte norte CREATE fo fo uy 1. 220s be 29% brcase te tice exec aso ePSCD] ONO © The RT ate for OCs ret cased as SME dng arson pa 27.5% he average of 30% RIT ser TRAD on 25 ROT nde CREATE on ©The MOIT rte cng eran en 8% Be egy 2% MOT ur TRAIN ow ad 1: vd CREATE ow 35. The income tax payable of he pats a a consequence of eh a parm i Partnership is: a. PO . 770000 . 680,000 6. Pa00 000 Answer: A ° im puneanerereanelPetnaebn stent Pee ened upcen ses te pce Cn A Se Picouaie tire ecm toner anh eee 8. Assume the taxable year is 2021, the income tax due of ho parnerstip should be, . 2000 000 P2500 ». 2.500.000 4. P0000 & Answer: B 35CPartue Sotto ‘ezao00000 (GPs Gras ince f opex ‘P,000 000 tice pps00000 Rorrunder CREATE: (Pram On 25K) PN er adr CREATE (P0000 18) _FEOOGH Income Tex Due ESS TTT Use the ftoning dat forthe net seven (7) queso: aria, Ramos, Torbio and Co, CPAs (GRT & Co} are partners ofan aocounting fm. The 2020 ancl records ofthe fm dslosed he folowing: Service Revenue 14,490,000 Castel Sens ‘sam Operating epenes t Rtnoe 500.000 Interest income from bank deposit 200,000 Ire ncome fom am FCDS epost __ 260000 Penner asls 2.000 amos a engaged inbsos wih loving dt foe oor oss sels P2000 Canto Sales 200m porn expenses 0000 57. How nh tenet ue othe Patri? A ©. PES 00 Se ee Anwar © Te prrertip ssid a General PtessralParnrsp (GPP). GPP is NOT Inc in te dente of Craton une Secon 22 of he Tax Cae, 28 aed Conseuety, tis a ables copaaion 9 agsona a GPs eam om ire tron sain incame. cae tx ut Seely rer oocane lx en ena cane, Nena, a GPP sje ‘hele suchas FT on passe inae and CGT an gan on slo shares of Sc coe het cameron aden al prperins ocatedin th Plippnes ‘38, How much the ota nal ibang x due ofthe Pring? 3. PO ©. PAZ000 . P4000, 4. P8200 & Answer D 316 Vrrtaership ‘Solution: f iret ean nak ent xg tre nae rom PS Peso 28, How much s the estutble income ofthe Patersip? ‘a, 992,667 «. P2578.000 b, P1019,333 4. P2978, 000 “ Answer:D Solution ‘ORDINARY INCOME: Senvice Revenue 490000 Cost of ences ona Renta income lane Gross Income Pao Operating expenses (enon ‘Net Income tom Oparasons esan000 * PASSIVE INCOME SUBJECT TO FWT: Interest income fom bank depos, rel of FHT Yonow (200,000 80%) Interest income fom FCDS tansactons. elo FHT; 234000 394000 (P200,000x 85%) + CAPITALGAINS retof COTS : - TOTAL DISTRIBUTABLE INCOME OF THE GPP pasr3000 © Disbtate income retest the tal income of he paranthip kam al sures Which are avalble for distbuion tothe pans may come fom te arnershi's orénaryincome, passive inom as wo a cal gis, rales, itapplcabe “40. How much is the cistrbutve share ofeach paterin the total income of the GPP? . P902.667 c. P2578,000 b. Pr019.333, 4. P2976.000 Answor: A Solution Total tttieincama ot GFP FRAT Divide by no, of panes = isinbutive share of each ofthe partner POSZE87_ © Unless pronded aeons, the doula income ofthe pahersip shal be ‘vided equal. 317Ee Partre 4 anos ding he yea"? © Bassotoso How mah te tale icoe of Ramos sets = ed = Forin se tdeg patreships (GP a GP) S pasioma 4 2500000 nh. eas nt posse © Toten se OSD ee wrote 98 camo yb ° ae 9 Remtte a a bn td naan a Founor OWES aoe dinerensbe gn OSs tne ern ap am Gross Sas ' Samo ype of deduction muse consieny apple e etne Sotto Soe ‘aus rh ta aon ape rate sacs i Openings Poston 46, How much to tral ince of Ramos asain the atretip an Net income from business Fra use Optional Standard deduction? ithe Parnershp and Ramos oped to ae 2, P1,376,000 © Ptee2000 etic te PP 5 5. P1826000 4. Pare Disorder pres Star offen SPP rt ae sn. pas TOTAL TAXABLE NCOME OF RANOS Ps, Smo hans bw ny re pre “Te pane’ stare inthe oe income of he GPP (eso PWT and Cas) Se NOT shownin ners ax tu ofthe parers oonrturable et). {GPP uc OSD fro pce mumbo) FROM RAMOS OM BUSHES {2 How uch be nal name ol Raosasing GAT & Co. ole ose Opin Grose mite: Sande Docton (03077 (ss 050 (ru ca) trang DpLaremo « Presama et con fom ores Rao rg ‘sma DB praweono =. PYaEOEO oso Tata ot ince Ramos ene 080 AOE oe ee oe Pe er repay Less: OSD (operating expenses): (1,352,000) ‘P3,380,000 » 409% a 44. TG Partnership reported net income before tax from trading amounting to 8,000,000 ope necncone 050 aT deg 2021 tart ya, Tre oer eco ned rel eae 0 PSO, Divide by na. of partners 3 20% final withholding tax and dividend income from domestic corporation of P200,000. ‘Share of Raros nthe ordinary income ofthe GPP —PETEDDO ‘Assuming T and G share poftsandlosses equly, how much the final wilding tox ‘at Fane om oe en he itouve share of thease aes? "eta canoes Fiaratee 2 PO oe Fat000 {Inconpuing te net ate icone, he Paersip as wal 3 the par 8 ene a Poon Ghose ben teria en OSD Ul sed eon, Tee Sarco tte Anna: GP's net proft before tax 78,000,000 Less: income Tex Due (P8M x 25%) Sm ane hinder Feat oral ovat vcone at oFWT nem a ioe saad a Lebeptcrret sly aie =o ‘Serra no it aso arcu ees be seme 2 ates roqeemoet ‘Substantiation is required. ne “P3, 140,000, Tatatsrespcsen Tratetusinespoesson led Stree ts 7 FWT on the distributive share of T Fee 318 319Prartrershg Econ ieinpenratonshi (6 soars ea nb eT ap rent ‘ato of 5545, Te data on income Omg penses 9,000,000 ne Eater tan Ee one Whatare he cect amouts final taxes witneld on he respective shares of Ian and Pence 2024 paterhip come? onze Pati7s0 —PA78250 a bzetars 230825 cma) RTD @ aes 2885 © Answer:¢ ran 2 es goss tame 7000 one Ps nticone Asn 00 Mig ey (0% 20% Rom AO GP aa, aan Fam ist ineme tof 00000 Dron cm zone Dense fo REC S000 Teese came tte CP PRSD.00 {Shae beone eK 272800 ‘arn icone 40% maaan ove 10% iat ‘ial Tern 0 Mei ot arr MSE sap nc eet od nao ‘ame sj FUT CT eer oe ater oe Poa ns PS¢00 00 wpe © Under te CREATE nn, cident income raced by 2 danas crparn Fo” ae a cpt ce der a rel a 320 Cartuershis EES - four fir Poruesh a cemmetca par ome by Corona Cteperans or yea 2021 th year ofopertons weer enna Te sus : os Soles estcoto Castles ‘ore Somes epee Seo Rea ovene ‘se Ui cere ‘rat Depecaonesenee ‘om Mzaloons epee ‘eon Personal lncome and Expenses of he panners Boromto Maas (Goss Income P3zmo Pano Deilcibe expenses 1mm0 —— 2aso.00 Dividend rom domestic corerain ‘soc san00 Dividend rom foreign corpraton ‘000 2500 Prize, supermarket affo 160000 75.000 Royal, books 00000 18,000 46, The share ofthe partes inthe net income ofthe patershipis a Exemplirom income b. Subject to 10% fil witnoldng tax ©. Subject to 103 credtable withing tax 4. Subjectio 15% cediabl winhokng tax eee) 47. Hw much sth share ofeach partner nto net cameo he pararship? a Pe c P3,452,625 > P2,301,750 <4. P 6,905,250 a S foes Sesecne ee) oe ae ie od oatpe 48.000. (5,793,000) cision 888 — Ba foremost Income Tax Due (9 2Lartuers ts arcaecT is or OH Merce ad pepabeshe Netrcoe ote Ges Soot cpr a conf SP ) The shan ate ncome 2 GP shal be based on he income othe prorat eit the exe tx 48. How much ste income tax due of Boromeo forthe year? P4000 ‘ PSQ0,000, 6 P490.000 4. 364,000 & Anewer:D Solon: 'BORROMEO'S BUSINESS INCOME: Gross hoa 3.250000, Devuctleeapenses 14,470,000) Daron oe ron corporation ‘20000 Dado fom somes copraion ~ 10% FWT Pras, soporte 2 208 RAT Royaly name = oe Share he sare oe GP ‘ou FHT Table netacone -Boromeo eo Taceme Tax Do (raduntod Rata) Fea OT On fs Pa inca 480000 Inexcess of PM: F200 000 3256 64000 +43, Determine the income tax due ofthe partnership and flu the applicable neome tax return & P150,000 ¢. P2,301,750 © Poon p22 100 © Anomec ive oe inno om 18,000,000 {te Opa eee: Sanur epee poe Revenue saan Caer ope am Dein opus ae Hmcalacusempenses — _ 48.000 (5,793,000). - ‘P9,207,000 fer ov Pan on tenets Pano neat ° mm alee stiz.a, iets ered agns ‘Annual income Ta a Income Tax Re esate 52.6 oso eee ween om nen= eRPEELE Partnershis Vartnershid Jf : Tansuaincome Tax RUT GFODRT] cnettsleens Tax pum 7O2-RT | comma nesonnasettta Tero] Craereateretateeee oe {Bf Peg2249300000. a frie pari ; [bot oinergatever pi New dave Bae nm sl What ese 2 iaynie.0.Ns, gBrssprevte a, Hi 324 35Partners 2 — FNS MARQUE, 71214015 szoi79.0.4 So OME of m5 ‘aac Partnership isa general preessona Fsuts of operations for year 202s Sth Gross Receipts Cost of sonices Saaies expense Rentexpense Utities expense Depreciation expenso ‘Transpartation expenses Miscellaneous expenses Partnership / Parerstip formed by medical drs. The yar of operations, ware as follows Partarship 3000.00 '8.000,000 5.800.000 2.500.000 350.000 70000 a0 ‘9.00 Determine the income tax due of and flu the appropiate ince tax tum a. PO P715,600, b. P572,000 4 Answer: A 58,000 © A genera poessins peep is exept tom ine tax 0 i erey income. 2 7i Partrership Partecrses ania “Annual income Tax Retury ee ee “Peart 05] eee see Io ih elena sesame zPartecria rfobex) emer oe EAT ATER IEAL ee 3,7 9,0,0.0,0 7 a Aged i 330 PART 6 Gross Jucome. GROSS INCOME eos Ica means ance deren eating ems erved from whatever source, chang, but NOT tmted Jncslon trom Gross Income [on 2 he Tx a, amend) 1" capensatn for serves whet fom pou Sg ee et Stes, wones, commision anna ang” aD ed ee, Gres cre Gtied ome cont ade Dns or exec of 9 stein ie dete fom desing n prover inert rene peje ohends: senate, Pre ad wri 0. Poona ane Pores bute share rom the et cine hee psa pees. HEPeNam eR © Exclusions from Gross Income [Section 32(8) of the Tx Coe, a amended] ‘The flowing Items shal nat be included ngs Income ae sabe exempt fom Income tae 2) Ue surance 2) Amount Received by Insured as Return of Prensa 3) Gifts, Bequests, and Devices 4). Compenseton for Injures or Scness 3 Income Exempt under Treaty Retirement Beets, Pensions, Gratis, ee 7) Miscetaneous items @) Income Derived by Foreign Goverment ©) Income Derved by tne Goverment fs Paty Sibdvsons ©) Pree and Awards Pas and aarti prs Competon ©) 13th Month Pay and Other Benefits 1) Gsisysss, medeare and Ober COMBO sc antttedess 9) Gains from the Sol of Bonds, Debentures oc 5) Gains from Redemption of Sars in Mua ©) Tax exempe meorme under RA 11494, Bayanian to Recover a5 One Acts known Bayanihan Act IT 33Gress Income SESE pee cere orserertarat emu ane for is eae cae ae me mnt Pe aa Soper ache a 2 a oem nt eo Sete enone en a ec ep St ey i on on as «ere senerts Sera rete, Pan fe Su Secor ar moogerak Sect FBT (8 falta) © Tax Exempt FB 2 provide as exempt under the aw oF [the gratis requred by the nature of, oF necessary to the trade, business or profession ofthe employer or + Tf the grant forthe convenience ofthe employer. © DE Minatars BENEFITS Conforming tothe celing Taxexenp and 'S Not include inthe P80,000 threshold + In-exess of the ceting ‘Subject to bask tax (anly on the excess over PS0,000) '$TAX EXEMPT 13°" MONTH PAY and OTHER BENEFITS Beginning Jan 1, 2018 ~ 80,000 “other Benefits” nude: + Gismas bonus (in exces of the PS 000 under ce minimis) + Produativty incentive bonus (not more than PlOk=ce minimis; more than P10k, the entire amcunt ix part of ether benefits) + Layaty awards + Gifts in cath orin kind and other benefts of similar nature actualy received by officials and employees of bath government and private Further, RR 32015 emphasized tat this excusion from gross incomes ‘ot applicable to: 1 Selbemployed inviuats; and + Treome generated fom business ‘FIXED OR VARIABLE ALLOWANCES Jn genera, hed er varable allowances in addon to the result czmpenstion, fied fr his postion or office, e compensation subject t income ‘ax and creitable withholding tx on compensation income (Section 2.78 (A) ot 32 Gross hneone 4 PRE-COMPUTED BUSINESS ALLOW ances eeterainment expense wich cpeeamatutdirts for taveing ana ‘an employee vile he is on an seo requirement of substantiation and to witaang (ny, ee et OF SUI the 4” BUSINESS RELATED ALLOWANCES SUMECT To LguinariON ‘Any amount paid specticaly, either as advan craven, representation ane aha on as SNES entsement for ‘ordnry and necessary expenses + ts or ordinary and neessry toetng and representa reeset or eteranet es Fad gens ot nae by he eminent peak Oe ae +The employe ened oaxcuntqute re feegpng en accordance ith he spec eqtamars ef staan eee of expenses pursuant to Sec. 34 of the tax code. Bl ‘REPRESENTATION AND TRANSPORTATION ALLOWANCES (RATA) BATA grnted to can ffl and employe of the goverment are consiered reimbursement forthe exeses aren te perenne tis rather hana adtal compesaton. Hower, the excess of RATA not retuned othe ener, cnt a onpeston ame oh tmloye. ‘STIPENDS OF RESIDENT PHYSICIANS. “The stipends received by resident physicians during thal intensive ‘raining in the residency prooram of a hasptal and individuals engaged inthe practice of profession or calling lke doctors of madine re subject fo credtable ‘withholding ta (CWT) imposed under the Tax Coe, as amended (BIR Ruling No. 1A (C-004}024-2010, February 4, 2010) COST OF LIVING ALLOWANCE (COLA) FOR MWES COLA rum age sae xt am cane a, The COU fers part ofthe nem oe aes sso ian ng, He, icons by the income tx exemption of MAES under PA 50, 9 Mleentedy Revenue Fogle Wo 1b 08 ahs cows sty ra wape (ce CSUn ines Nex ae rr hes Nen) es any ay, tie Py, ight shit efferent pay and hard pay * oMaT EU teem geen ne et cea em benefit of the female employee shal pertain to the 14 pay or - ‘One ofits components isthe salary difereiial- 333Gross Ineome Gross Income (9 Retirement Benof under Rd 11 + (20 known as Bayarihan iy mlene eee Recover Oe Act , Boyan to the actual remuneration oF earnings paid by ay mpiemented by 29-2020) ‘ula sata pea working e346 8nd ours nc Ce tfer services rendered. on noral ry nd feu ety Retirement Benefits rece pve ere for under existing company POICY OF COlectve barcaing tithe nda or cae CCAS 2nd emooyens of pvate fn, ‘areement, if any. provides! om Juve 5, 2620 0 December 3, 2090, rs 7 That the amount re _ Sp gemma tem oe ee ae rane oe ein San aa ash benef receives to Secu Spe ( . aa Ikra Revere (IR, provides Pee eee pay ot slr ofthe female employee dteing the caine 2nd he tlt pas gy aes GI employee nthe same fr the mater leave. Shall be consdered os poe osnsenna MEV (12) oth prog re ia teeter bee’ fe el Testor samt Bemae ereanaonocea eine NOTE: The aboveme benefits of employees amended. ned ore dont ce he de Seen TNE) ee Tr Cae os |¢ PREMIUMS ON LIFE INSURANCE Premiums on ife insurance covering the Ife ofan employee paid bythe employer istaxable income to the employee, where the insured employee, dry tr indecty the benenary under the ply. my Day the taxes due onthe retirement benefts recived win tr (0) cove = TPS AND GRATUITIES from date of re-employment, or cn the di cate forthe payment the 0 ifpad recy to an employee: taxable income ofthe employee but second instalment payment of 2020 income tax, vnihever comes ier, nat subject withholding. witout perattes. 2 accounted fr by the employee tothe employer (Le, included inthe Sosa tia neameet te eolyce end ste oe ane Se 4¢ RETIREMENT BENEFITS, SEPARATION PAY, PENSION. ets the amount paid for the use or enjoyment ofa thing elo persona) ort ‘® Taxable Rent Income of the lessor may inthe form of: 6 With Reasonsbia privat bene pln ts 1. Cash received, at stipulated price. Retirement pay as a rule i taxable, except those received by 2 Obligations ofthe lessor to third persons pad or assumed by the lessee cfcats and employees of prvate firms, whether individual of corporate, ‘under a reasonable private benefit plan maintained by the employer whieh ‘meets te follwing requements: 4, The retirement plan must be approved by the Bureau of Interral Revenue; 2. The reting offal or employees must have been inthe service of He sae employer for atleast ten (10) years, ard, Ts notes than ity (50) years of age atthe time of cetirement; and Inthe absence of reasonable private beneft plan An employee may receive tax-exempt retirement benefits who Nas reached the ag¢ of 60 years or more, but not more than 65 years, whe hes Serve at eas 5 yearn he establishment (IR Rung No. 495-14 CHE December 11, 2014). eel 34 ‘consideration of the contrat of ease. 3. Advance payment, which may bein the frm nthe fom of prep rent (reported in Ful nthe year of recep) ‘Rental income shal bo taxable on he yor civ wher ead ves, provided, hare isn ren cto se, and ears meodof eccouing empoyed 4. Securty depos in genera rata tbe neon. shal be ecignaed 3b kalo the ner tte ese The sor asthe obgton To Tern the smut tothe see ua he expat of he ae te. Momeversecurty dept sabe conse a tate hove Spon etre ovr ote ro Upon apace seal emer. 5. Leasehold Improvements, , Improvements mae bythe este. Pp mrovrers wl be owed rn value of su 2 Riga eS aed to pay elses the valve of sch improvements 1 vere cof he soe se be sr (art of omessip) 335REPORTED AS FOLLOWS. . OL WPROVEMENTS§ REPORTED AS FOLLOWS, _ aeRO —_ TAXABLE AMOUNT 1 Oa. relent basa tom, 8 fone “Renanng Temes 2 PreTeratn cliente Te aston ame as anoint —————SCS~*~« Tron aang cpp eo) tome art eemenlen Pr ¢NON-Taxable Rent Income ofthe fessor may inthe form of: 1 advorce reals represetng option money 2. Seeunty deposts to insure ath performance of certain obigations of the lessee. = FORMULA Rental Payments Prot Expentes ofthe lessor assumed by the lessee Income from leesehald improvements ea Total Rental Income ss 2) Speatautor Aral aos om te pre temnatin is computed as eos DIVIDEND INCOM anos: 1) Cash Dividends 2) Property Dividends 3) Stock Dividends 4) Uquiating Ovdends ‘CASH & PROPERTY DIVIDENDS + Cash and property vidende shal be taxable upon declaration, Tock DIVIDENDS. GENERAL RULE: Distro f tock denis notable because they are mt EXCEPTION: A stock dvdend coosttutes income If gves the shareholder 20 ‘nares ret am hat wich isomer sentence aertee LquIDATING oIviDENos ‘Liquidating dividends are exempt up to the extent of the investment bed 3;mare rum of coal Howes, anvhng tees aot al Coma mre shes ae ty the stockholder in lquidaion is less than the cost of ‘he transaction is deductbe to the extent atone f° 336 Gross Ineane SITS OF DIVIDEND INCOME (tn 2 eT Ct ne a 2) Diets fom wt (oie! heme ea ea ca 1b). Dlvidend Income from Foreg Priippines, 2). OWidends from without: Dividend income from Foreign Crporeton IF the ratio ofthe goss income Prilippines over worldve income for he thee year period ening with tne cose of taxable year preceding the delaaton of such eden (0 or such ‘art of such period as te corporation hasbeen in existence) Is rs than 308% SUMMARY: Ince py fo Pinan sources FOREIGN CORPORATION Ra Ra MGiphis + Dimes C5 Otc tat ny ‘Sonos SITUS OF DIVIDEND INCOME FROM FOREIGN CORPORATIONS (RIC 62-2021; RR 5-2021; Sec. 42 ofthe Tax Code, a5 amended) Dividend income received by DC frm NRFC: considered as foreign sourced dividend Under RR 5-202. Dividene Income received by DC from RFC (RMC 62-2021) ‘The tax treatment of dvidends received by a domestic corporation from RFC will depend onthe sources of Income ofthe RFC. Under Section 42(A)(2)0) ofthe Tax Code, as amended, cvdend from a foreign corporation shall be trated a income dived fam sources WITHIN THE PHIUPPIES LAKES less than 500 of the goss income ofthe foreign corprabion forthe three ear pertod ending th the close of table yar preceding the declaration ‘Of eueh crvdends (or for such part ofthe period as the cerpration has been In eistence) was derved rom sources within te Philipines. 37Gross Incing TEES sunject © 20% FT Subject to 259% FT Suiject to ‘ase income Bxenpt fom y 2 » 5) 8 a > 4 cote navi (ert NRANET) fom sauce Pate ones exceeding 0,000 Me pcs wings excseding ?10,000 STRAIN Law Treceved by RC, NRC and RA + CREATELaW rosie by RC, NRC, RA ane MRAET. ‘other winnings rom sources within the Philippines regardless amount ries and Other winnings Including PCSO winnings reeled by ak, Nee Prizes and Oter winnings derived by resident clzens and domes ‘poration from sources without the Phillpines Praes and winnings received by corporations Priaes reeled by ini fom sources within the Pilipinas amounting to P10,000 or ess CSO winnings TRAN aw © PCSO winings of not more than P10,000 and recehedy NRC and RA © PCSO winnings, regardless of amount, i raceives by NUE! + CREATE Law CSO winnings of not more than P10,000 f recive by NRC, RR and NRAET Prizes and Awards made prinaly in recognition of + Religious, charitable S Scentie + Educational artistic, terry; or + ovic achievement Proved he recent was ant 2) Sa wit yan om spr eter rece (nt contting ys rr ban 2 ; Rot requted render sual fre sees 282 2% ‘ie the preva prs nd ards rat ates nc an ee competitions and tournaments, whether held in the Philippine a td snconed bya tape nn ps ooo Winnings under Section 126 ofthe tax cade (winnings on 38 Gress Icone eer oss cone seer ema someomy Income whether coming from Jaga’ or ilegay sources, eee HOLES BM rcme fom eterg 3) reo om awning aces 3) neon of bal aes 3) Retond oftoxee 3) Unutiaedescess cmpain nds 8 raven of nbatnss 1% RECOVERY OF BAD DEBTS eg orp eee i qe ee mea ria eterna 2 Bae aes menace cere | REFUND OF TAXES ‘The following ae the requirements beer refund of taxes be considered income: 1) Theres payment of tax in the previous yes; 2). The tax pald was deducted in arving a he taxable Income: 3). Theres a resulting tax bene on the deduction. * TE TREAT Debtor performs services to the creditor Compensation Income Creditor desies to beneft the debtor witouany Git consideration Creditor corporation andthe debris @ Dividend income stockholder af sh corporation 339ERS Te folowing are exchsons rom the Gress Iacone ) of the Tax Code} EEN income as provided under Section 32(8) of he Pen ee at es HAN a BRE: LIFE mesuRANCE ener le: amp rom axance tia ere remburserent or he se, = re sa be ale: ce Tac wa chosen ora val conieraton. The mere ear on he muon pa revue oF REMWUM RETURN OF TREN pe a2 ren fem Bly Ni drt aa a Tonner, ox annuity contrat, eter during the term or at the maturity Ate term mentoned inthe contractor upon surrender af the contract Return of Premio Exempt Bess Ireome GIFTS, BEQUESTS & DEVISES ‘Ie value of property acqtes by I, bequest, devise, or descent: Provised, however, UDatncome fam sh propery, 2 wel as af, bequest, devise, or descent of income from any property, in eases of antes of vided interes, shall be lncuded in gross income, ‘Property inherted or received as git Exempt Tncome of above properties Tosable ‘COMPENSATION FOR INJURIES OR SICKNESS Amounts receNed, tovgh Accident or Health Insurance or under Workmen's Compensation Ac, os compensation fo persona injuries or sickness, pus the amounts lof any damages recened, whether by SUE or aoreement, on account of suc injures or scenes, INCOME EXEMPT UNDER TREATY Income of any kind, to the extent required by any treaty obigation binding upon the ‘Government of the Philpines, shal be exempt. RETIREMENT BENEFITS, PENSIONS, GRATUTTIES ETC. 2) Retirement benefits resive under Repub Act No. 764% and those received bY fofcils and employees of private fms, whether individual or corporate, sconce wi a reasonable vate bene pln maintained by the ETP ‘That the reting ofc or employes has been inthe service of the Same employer for at east ten (10) years, Atleast ity (50) years of age atthe tine of his retirement; and * That the Benes grants shal be avaled of by an ffl or employee OM Gross Income 1p. Arjan sect tof Suonpie becacet Seah 2 Sekness {terial by or for any a Srempoyee, NY ofan cause beyond the control of he sid offal Social securty benefits, retirement 4) Payments of benefits due or to become due to Philippines under the laws ofthe Unt ‘any person residing in the Fear acon te Ute Sates admins byte Unted Sales €) Beefs received rom or enjoed under he Sc SacutySytam in accrdonce ‘with the provisions of Republic Act No, 8262. sauce da 1) Benefits received from the GSIS under Reptile At No, £291, ndudng retirement ‘ratuty receive by goverment offials and employees MISCELLANEOUS ITEMS. 23) Income derived from investmentsin te Pllpines inane, stocks, bonds or ether domestic securities, or from interest on depos in Danks i the Philpines by 2. Foreign governments b. Financing insttutons ovned, controled, or enjoying reancing fom foreign ‘governments; and & Intemational’ or regional franca insmions estabished by foreign ‘governments. ») Income derived from any puble uty or from the exerdse of any essential ‘governmental function accruing to the Goverment ofthe Philippines or to any Poltical subdivision thereof. Prizes and awards made primarly in recognition ofeligius,chartable, scientific, ‘educational, artiste, Ierary, or Gc achievement bu oy if ‘2. The ecient wes selected wthout any action an his par to enter the contest oF proceeding; and The reclplent is not required to render substan futue services as a condition to receiving the prize or award Al prizes and anand granted to atlees In cal end real sports SClsanalowance pedo both pote and public heath workers det tring to orn contact wth Covi-19 patients for evry month that they are serving ‘dung te state of national emergency de to Covid-19 as declared by the Present. Actual Hazard Duty Pay given to RH Is compensation vento temporary Human Resouces for Health (HRH) "ering inte front ne dng the sae of emergency to Cova. 12) Compencaton paid opiate and public health workers who have contracted (COvID-19 nthe Ine of ety or ies whe Nghing COVID 18, amoung to: + One milion pesos (,000,00.00) incase of death, or ‘One hundred thowsans pesos (P100,000.00) incase of severe or eical sickes; or + Fitzen thousand pesos (P15 000.00) incase of mila or mederate sickness. Provided that such amount given o to be given fam February, 2020 and during the state of national emergency due to Covidl® 95 derlored by the President; Proved futher, thatthe conpersaton provided herein shal be Wen tw the beneficries not ltr than tree (3) months ater the date of confinement ‘oF death; Provided ally, thatthe required supporting documents are submited. For compensation n case of death, the said amount shall ot aso be Included 25 Dat ofthe gross estate ofthe dectdent subject to estate tax. There fom sour tne apes Ince fom sours party Wen fp oi te Pipes Income from sources without the Philippines. ae we Gress Income uc ROM SOURCES WITHIN tones a2 cine Taxco) 1), eres crv om sues hn the Pines oF oer ners ean nr ce ees, ts 2), Dividends from : a, Demeste Corporation; and Foreign Corporation, Fat lst 50% ot gus cme riod ending withthe cos of stable fr peeaeg eee such vided (oor such at of such pet See oe ineastence} was cerned rom saucse wes he ape tha 3) Compensation for labor or personal services perforin the Pipes; 41)_Rentls and royalties fram property lected inthe Philpines or from any interest in such property; 5) Gains, profts and income frm the sale of rel property located nthe Priippines; 8). Gains, profits and income fam: sale of personal propery: 2. Sale of property «sod in the Prapanes Sale of shares of domestic corporation - regardless of the pace of ole Sale of shares of foreign corporation ~ I sald nthe Pilpenes 68. IF manufectred, only f manufactured and sl itn the Philippines, INCOME FROM SOURCES PARTLY WITHIN OR PARTLY WITHOUT (See 42(6) ofthe Tax Code) 1) Gains, prot and income fromthe sale of prsoal property produced (whole or in art by the taxpayer within ane sc without te Piles oF 2) Produce (in whole orn prt bythe taxpayer wahout and sold win the Philippines. 38y eee ee Gross hcome ne Duclos a Croperty 9 SCHEDULAR TAX SYSTEM VS, GLOBAL TAX SYSTEM CLASSIFICATION OF ASSETS ome nes vanes mae [oaepen one or elegy 1). Ordinary bia eo fe SE 2) Captal Tae resin Uber arr alo cream crac a sone oe ORDINARY ASSETS 2. tame + mumsnet + gta | tefooning are cessed as orn ats eer 1 stock in trade of the taxpayer or other 7 © induded nthe Inventory ofthe wrgayar; ” * Mt WHEN woul propery be 3 Alay + eal — 5 Rec meron ie is trade or business; ‘© customers in the ordinary course of Steen eae asa « fren tints ume un cuantnseeee ae 4 Real property used in trade or business ofthe taxpover. The ale of he above ast wl eet to gn ors Ten Desc x We the ls Is fly dedctiblein avg at enable keane CAPITAL ASSETS © GROSS INCOME TAXATION VS, NET INCOME TAXATION Geos icone Tacoma an come BE eee CELE eee eee Al assets not classfable under ordinary sal be casted as cap ases. certs sowed ToxBase + Goshen + Totton Net Capital Gan ~ means the excess of he gains om ales or exchanges of capt assets over the loses fom such sales xanga eplettly + NRANETE + Initegaers oe NOAER Capertee exes Net Capital Lass- means the excess ofthe loses fom sles or exchanges of + Nonesen epertin teen cop capital assets over the gas rom such sas or exchanges. SERCENTAGE TAKEN INTO ACCOUNT Aowarogts + Mimzessoureotgntand + st a teaser Inthe case ofa taxpayer, ater than a copaatn ony te flowing percentages of Secrest: Siren fiir inlet aera eraser gS Sinagie escetan ‘xerpos) olangye® Ito acount in comping net a a os, id ek oom: freciesbyren tet + Nero get count in computing net capa gan, net ca ees as axovsin 4) One hundred percent (4008) Fhe capital ase has een held fo rat more ‘Sees ey as ‘than twelve (2) months; and a 2) Fifty percene (50%) ifthe cptal asst has ben el fr more than weve (12) months. LMITATION ON CAPITAL Losses GENERAL RULE: Losses from sales or exchanges of capa ass shall be alowed, ‘nly to the extent of the gains from such sles or exchanges. EXCEPTION: Tne Limitation on cpa sss Wl nat app, roe: 1 The seller a domestic bank oust company 2) A substantial part of whose bushess ithe rece of deDes 344 aSGross Iheome » Fae euphoric er te yea athe erat nt ane ane Serena cet er er eee a ee a note GAINS 8 LOSSES FROM SHORT SALES ETC ‘The folowing sal be considered capital gains Or lsses 1) Gain ef oses fom short sales, and 2) Gas orlsss atnbutable to the Tale to exercise privleges or options fo buy se property. DETERMINATION OF AMOUNT AND RECOGNIZTION OF GAIN OR LOSS, ‘COMPUTATION OF GAIN OR LOSS Money rece HV of property receved ‘Amount Realized Bass or Adjust Basis Gon (Loss), PERE? Fi Mata Vale atte ine ofits ‘GENERAL RULE The sare a woul be inthe ands of the donor oe ‘rococo EXCEPTION: Fe Net ale fe tn of donaon ona Ban ‘ove abe, be pupose ef deleminng tess ‘Amour pity te tansiree Gross Income XCHANGE OF PROPERTY (Scion 4,0 Tx Cote, Code, as amended) [EXCEPTION: No oan o los sha be eognzeas ‘Sexton #2) fe Tax Code AMEN SAEATE Lao ow 2) A corporation, which is a property sola for stock in consoldation; or ‘party toa merger or consolidation, exchar 2 copra, wich s 8 party to the merger oF © Redeye arm nena aa esa pues room gate Sqekema treet aamemormes esa f Sacer te a Spec el ha Ss ica aes asm ©) The Acuiston by ne (1) corporate, n exchange sof all ora pr of is voting soc, on exchanges rl orp fe voting ste of 0 Corporation which nero fe acqarng Crporton, of stnty a of the properties of aati coperten In deeming whether he exchange soley for the sac he simpson by he aging cerporaon ‘of tty of te others sal be epee 4) A recapitalization, which shall mean an arangement whereby the stock and bonds of @ corporation are adjusted a to acu, income, or roy or an agreement of all stockholers ard creditors to change and increase oF ‘decrease the captalization or debts ofthe corporation or eth; oF ©) A relncarporation, whieh shall mean the fomation of the same corporate ‘busines with the same assets and the sae stockldes surviving under ‘new charter. 2) IF property ie transferred to 2 corporation by a person, alone oF together with others, net exceeding. four (4) persons, in exchange for stock or unit of Dartipation in such corporation of whic as 2 resut of such exchange, the Uansferor or tronsferrs, colectively, gains or maintains control of sad ‘corporation: Provided, That stocks issued fr series stl not be considered as 'ssued inretum for property.Gross Itcone nore ness for ares of 00 Covered der «sae or excange of open se fr Des Sa os tn be bj 1 value ae (= aces excange of property, por BIR confrmaton or + nat cS Ina ofthe reg faq or purposes of eating te tx exemption. ssasronteet es vem cen enn at xe ne ar ob Taser rice ht ne Ss mere ea ata (raoa0zt) ‘Te concmed pais can ipaer «Tre term “controt when used i this Section, shall mean ownership of stocks in 3 Corporation after the transfer of property ‘at last ity-one percent (51%) © St Roses of stocks ented to vote: Provided, That the {jal ounerhip of all asses of stocks entitled to vote of lective and Oo raferar shall be used in determining the presence of conto. ie letter ofthe comec answer ccnose tt prices poe, tx upc {Means ll income from whatever source ‘xcluded under the Tax Code 7? 9a!) unless spectcally 11. Means all wealth which ows into tr taxpayer Wy, Ror smantct none ape xa speciod lie, wheter a loa person or caporaon vin 3 a 35 payment of ences, inlerest,o pois rom a. [and only ». land ony © ktiand 4. None ofthe above Answer: C 2. Thsouots fom hich ineame deed tabor eg actives Pros dered fom se or xanga cpt Allof the above a ol Answer: D The souroes from which incomes derived x8 o_o. Taber Tne Tae True False Gifts and inheritance True False False False lee otcapial __Trwe_Tue_False_Fase Answer: B 0 Propetis received trough dna adnetance ae rotincame, Hower, ‘rcome denied fromthe use of such popes af cassie as rable inca, 4. 2021, Pedro sent his sister Ana $10,000 via elegraphic rane though he Bark e Ure et Plipinas. Loma, the banks remancecerk made a mistake and edt Aa wih $100,000 which she promplywibdrew. The bank demanded te ratun of he mistakenly credted excess but Ana refused. The BIR arfred he pture and investigated ‘Would the BIR be’ conect it determines that Ana eamed taxable income an these facts? Ho She had no income because se ro incomes axable regardless fe 90 Xe Ramee nts sanyo 14 no ight othe mistakenly credited funds.Gross Iecone het Note funds in excess 0610000 ween eect donated fo income 8s al Income derived fom 2 Anewer 8 Se 2 of te Ta oye sol wea, MOM 3 Stony sen act oe ce ss at asc Fe ts or ec isa sicof income? icf be ooving ina ctr x z : jue Tne Tue ‘False lesesginarogeswesin ne Fae False Fale pean Tne False False Retur on taxpayers weath ‘True & Answer A Which ofthe folowing is a equste for an Income tobe taxable? a. There must be gal D. The gan mus be reazed or received ; ©. The gain mus nat be excluded by lw rom taxation 4. Alof he above Answer D Wich of the flowing is not an come for income ax purposes? Gain derived fom labor. b. Retum on cpt Excess of seling price ovr cost of assets told 6 Gitrooeived & Answer: D Wich ofthe folowing is not an income fr income tax purposes? .Coleconof ans receivable . Condonation of debt or seroes rendered Excess of sling price over te costo an asset sold None ofthe above Answers A ‘Which ofthe folowing isnot characteristic of income? 4 ncease in taxpayers weath Realization o recep of gain © Eamings cai 4 Retumo txpayes weath, & Answer: D 350 T Gress Income ‘ens ot vali defoiton ot tcong? io ‘a. Income is the retum from capital invested, 4 Incame is funda ore dsc pont fine Ina means a Weathwhik Ronee ° fam ows oe epee cbr han amare ein of 4._ ome means cath is eae us une pe Answer: B ‘4. Te sharin he pfs of pare ina gener ptessonlpaerip is received by him and thus taxable although not oe ip is regarded as Maul eof mao, OAS Ts popes own a, ‘vance reporing of income ‘Accrual method of accourang Consrutve recep oineame Answer: D eres 12. Which ofthe following is considered or consined 2 an example of consiucive recog? 2. Reliomentbereis persons gases b. Fees pad o pubic oficial Interest coupons thathave matured and ae payable but have ot been cashed 4. Deposits for rentas to answer for damaces, restced as louse & Answor: 18. Constructive receipt occurs when the moray consideration or its equiva is placed at the conto ofthe person who rendered the service wihourestitons by the payor. The folowing are examples of constructive receipts, excopt ‘2A security depost to insure the fal perfomance of cea obligations of the lessee to the lessor. 5 . Depostn banks which re made avaiable othe slr of sonics restrictions; 6 s1ace by del ofa ace Wott ay tanion an scape ‘hereot by the seller as payment fr services ender 4. Transfer of the amounts relied by the payort the account ofthe contacter. Answer A "6 Tha sconce eet ce wen ayent is cried to payen's accu - 5 Payments set ad fore paee o oes ade ava oe pee ‘draw upon ital any time, oF So the payee could have crawn ups ; taxable year if notoe of tenon to wba had Been gen wou substarta Ieiations. © Both“a'and "tt 4 Neither a" nor"b” 351Gross Ircome & Answor: 15. Whon diferent typos of income are subjected 10 comenan ta rate, the Lax sysam jg desorbed as ‘Soba tax gst ‘Gross inoomo tax system ‘Shar lx sym Fal x system Answer A ‘tus of income 16. Siu, for taxation purposes wil depend upon varus factors, neudng 1. There ofthe tx andthe subject matter thereat |The passe protecton and bene that may accrue both othe government and ob taxpayer. IN. Domicleoresdence WV. Ctizenship V._—_ Source o income ‘Land V only Lik Mand V b LillandiV ony. LI, Wand V © Answer: D 17, As. ile, income from whatever source i taxable. Income rom whatever source may ‘ame Fon |. Gain arising from expropriation of property IL Ganbing gains |i, Income fom legal business or rom embezzlement IN. Recovery of receivables previous witen of V. Taxreunds Vi. Compensation orinjury sutered Vil Gratutouscondonatin of debt ‘a. Land ony be Land V ony LIV.VandVionby . 6. (Ill Wand V only Answer: 18. Suse xtonen remo toms of propery pha Place of the seler sec ees Pleat sal © Pleat be ‘i ; 382 Gooss liceme Wit of teflon est of sous ot nce i Fe) ints neon restenes oom? bean tom sce & Royates pone at & Ganonsab oslo ay 4 Answer: D 0 Thesis sinc sc pty were popety stated Par ee enn Se stot dates cove {ipa te dc te inet am xsopen 4. jo pr we sng sl ieee cn a eb 4 Answer: A 2, Sius of taxation on income from sale shares fa fogn capraton Aas ieated 2s income derived tom within he Phippies Always eat as income drive fom wibut he Pines Maybe etd 2 come tn orate Pghes depending on be pat 4 May be Weated as income within or witout be Phippines depending whee the ‘hares are kept Answer: 2. Stolement 1: gain fom sal of stares of domestic cupeaton shal be considred ‘ered fom the Philipines regaessof wher the shares were so ‘Statement 2: A gan fom a sae of shares of foreign corporation stl be consitered ved fom the county where the corporation was created or organze, 2, Stetoments 1 8 2are fase , Statement tis tre but statement 2s fase © Statement 1s fase but statement 2s tue 4, Statements 1 and 2 are te Answer: 3 Pato rom a premssor rlsued oi by Jun, resident of eee eet msec Subject basi neam tox Seto lion subject lo income ox Partly subject to scheduler and party subjacto fine tx ae Answer: 353