Chapter 11

Problem 11-1 True or False

Write true if the statement is correct or false if the statement is incorrect.
1. All qualified dependents are granted an additional personal exemption of P50,000 as long as the maximum
number of dependents is four.
2. A foreigner who stas in the Philippines for 1!0 das during the taxable ear is deemed as doing business
in the Philippines.
". #onresident aliens not engaged in business in the Philippines are allowed for personal exemptions and
additional exemptions sub$ect to reciprocit.
%. &he basic personal and additional exemptions of a single mother with an unrecogni'ed dependent child are
P50,000 and P25,000.
5. (ndi)idual taxpaers are allowed of installment pament for their income taxes when the tax due is in
excess of P2,000.
*. At the option of the taxpaer, income taxes paid in the foreign countries can be claimed as deduction from
gross income or tax credit sub$ect to limit.
+. A senior citi'en,s passi)e income is sub$ect to final income tax.
!. An indi)idual taxpaer is exempted from filing income tax return if his sole income has been sub$ected to
final withholding tax.
-. .or self/emploed taxpaers, his quarterl income tax return is not to be reduced b personal exemption.
10. (ncome earned outside the Philippines b domestic helpers is tax/exempt because the are considered
nonresident citi'ens.
11. &he personal exemption of a nonresident alien not engaged in business in the Philippines is sub$ect to
reciprocit.
12. A citi'en who wor0s abroad most of the time during the taxable ear is a nonresident citi'en.
Problem 11-2 True or False
Write &rue if the statement is correct or .alse if the statement is incorrect.
1. A man os woman who pro)ides chief support to a brother who is 20 ears old and incapable of self support
is entitled to claim basic exemption of P50,000 and additional exemption of P25,000.
2. Paments for hospitali'ation not exceeding P2,%00 per ear is allowed as a deduction for indi)idual
taxpaers.
". (f the taxpaer dies during the taxable ear, his estate ma claim the personal exemption as if he died at the
close of such ear.
%. &ax on special aliens is 151 of their net income deri)ed within the Philippines.
5. Professional or talent fees for ser)ices rendered b an indi)idual shall be sub$ected to a credible )alue
added tax.
*. An indi)idual taxpaer can claim additional exemption of P25,000 for supporting a senior citi'en who can
show a certification from 234A.
+. An alien residing and doing business in the Philippines is allowed to ha)e a tax credit for income taxes paid
in other countr.
!. (f the professional fee of an entertainer exceeds P+20,000, the credible withholding tax should be 201.
-. 5ross income for computation of standard deduction includes business income plus other taxable income
not sub$ected to final tax.
10. (nterest income of a foreign currenc deposit of a nonresident .ilipino is sub$ect to final withholding tax of
+.51.
11. &he financial position and profit and loss statements are to be attached in the annual income tax return if
the business gross sales in an quarter exceed P50,000 but do not exceed P150,000.
12. &he income of a professional entertainer can be reduced b optional standard deduction.
Problem 11-3 Multiple Choice
3elect the letter that contains the best answer.

1. &he following indi)idual taxpaers are granted basic and additional personal exemption except.
a. 6esident citi'en d. #onresident alien sub$ect to reciprocit
b. #onresident citi'en
c. 6esident citi'en
2. .or Philippine income tax computation, which of the following indi)idual is taxable also for income earned
outside the Philippines7
a. #onresident alien c. 6esident alien
b. #onresident citi'en d. 6esident citi'en
". A foreign indi)idual who ha)e staed in the Philippines during the taxable ear for more than 1!0 das but
less than one ear is considered a
a. #onresident alien doing business in the Philippines
b. #onresident alien not doing business in the Philippines
c. 6esident alien
d. 6esident alien doing business in the Philippines
%. Which of the following is taxable onl on income earned within7
i. 6esident alien
ii. #onresident alien doing business in the Philippines
iii.#onresident alien not doing business in the Philippines
4hoices8
a. (,ii, and iii c. ii onl
b. (i and iii onl d. iii onl
5. Which of the following indi)idual is taxable at 151 on compensation income deri)ed within the
Philippines7
i. 4ompensation income of citi'en earned from emploment with regional or area
headquarters of multi/ #ational 4orporation.
ii. 4ompensation of alien earned from emploment with the petroleum ser)ice contractor.
iii. 4ompensation income of alien earned from emploment with an offshore ban0ing unit.
4hoices8
a. i,ii, and iii c. ii onl
b. (i and iii onl d. iii onl
*. Which of the following is not required to file an income tax return7
a. 6esident citi'en with respect to his business income earned outside the Philippines
b. An emploee with onl one emploer and whose compensation income is full collected
with creditable withholding tax.
c. #onresident citi'en with respect to his compensation income earned within the Philippines.
d. #onresident alien with respect to his business income earned within the Philippines.
+. Which of the following is not correct7
a. A self/emploed indi)idual is required to file a quarterl income tax return.
b. &he income reported in quarterl tax return is cumulati)e during the ear.
c. 9usiness expenses reduce the income reported in the quarterl income tax return.
d. &he income reported in the quarterl tax return is reduced b personal exemption.
!. 3tatement 18 An alien who shall reside in the Philippines with no definite intention as to his tax is a resident
of the Philippines.
3tatement 28 A foreigner who has acquired residenc in the Philippines shall onl become a nonresident
alien when he actuall departs with the intention of abandoning his residenc in the Philippines.
a. 2nl statement 1 is correct
b. 9oth statements are correct
c. 2nl statement 2 is correct
d. 9oth statements are incorrect
-. 3tatement 18 4ompensation income is reduced b personal expenses to arri)e at the taxable amount.
3tatement 28 9usiness income is reduced b business expenses to arri)e at taxable amount.
a. 2nl statement 1 is correct
b. 9oth statements are correct
c. 2nl statement 2 is correct
d. 9oth statements are incorrect
10. &he following persons benefit from personal exemptions, except
a. 6esident alien, not doing business in the Philippines
b. #onresident alien, with onl compensation income earned in the Philippines
c. .oreigner who staed in the Philippines for more than 1!" das and earned business income
within.
d. An alien with onl business income earned within after a ear of sta in the Philippines.

Problem 11-4 Multiple Choice
3elect the letter of the best answer.
1. An indi)idual taxpaer, whose personal exemption allowed in the lower amount pro)ided between
Philippine &ax 4ode and his countr,s &ax 4ode.
4iti'enship 6esidenc 9usiness income
a. .ilipino Within #o
b. .ilipino 2utside :es
c. Alien Within #o
d. Alien 2utside :es
2. 3tatement 18 (f both husband and wife are earning income, onl one of them could claim for the additional
personal exemption.
3tatement 28 &he husband is the rightful claimant of additional personal exemption, unless he wai)es his
rights in fa)or of his wife.
a. 2nl statement 1 is correct
b. 9oth statements are correct
c. 2nl statement 2 is correct
d. 9oth statements are incorrect
". 3tatement 18 A tax credit will reduce the taxable income.
3tatement 28 A tax credit will be a)ailable onl when there is foreign income tax paid b resident .ilipino
for income earned without.
a. 2nl statement 1 is correct
b. 9oth statements are correct
c. 2nl statement 2 is correct
d. 9oth statements are incorrect
%. 2ne of the following is not creditable against the total computed tax per (&6.
a. .inal withholding tax
b. .oreign income tax paid b resident citi'en
c. 4reditable withholding tax on compensation
d. (ncome tax paid for the first three quarters for the business income earned
5. .or taxation purposes, A .ilipino citi'en who staed outside the Philippines and wor0ed abroad for 1!2
das during the taxable ear is classified as
a. #onresident citi'en c. o)erseas contract wor0er
b. 6esident citi'en d. special taxpaer
*. Which of the following statements is true7
a. 6esident citi'en with income from foreign sources onl is allowed a basic personal
exemption onl.
b. #onresident alien not engaged in business in the Philippines is allowed basic personal
exemption onl.
c. #onresident citi'en engaged in business in the Philippines is allowed for basic and
additional personal exemptions.
d. #onresident citi'en with income from the Philippines onl is allowed both basic and
personal exemptions.
+. &he personal exemption of the nonresident alien engaged in trade or business in the Philippines is equal to
that allowed b the
a. (ncome tax law of his countr to a citi'en of the Philippines not residing there.
b. (ncome tax law of his countr to a citi'en of the Philippines not residing there or the amount
pro)ided b the #(64 to a citi'en or resident, whiche)er is lower.
c. #(64 to a citi'en or resident.
d. (ncome tax law of his countr allows to a citi'en of the Philippines not residing there or the
amount pro)ided b the #(64 to a citi'en or a resident alien, whiche)er is higher.
!. Which of the following taxpaers whose personal exemptions is sub$ect to the law on reciprocit under the
&ax 4ode7
a. #onresident alien with respect to his income deri)ed outside the Philippines.
b. #onresident alien who shall come to the Philippines and sta therein for an aggregate period
of more than 1!0 das.
c. 6esident alien deri)ing income from a foreign countr.
d. #onresident alien not engaged in trade or business in the Philippines whose countr allows
personal exemption to .ilipinos who are not residing but deri)ing income from said countr.
-. 3tatement 18 &he maximum amount of hospitali'ation and health insurance allowed as deduction is P2,500
per ear.
3tatement 28 &he allowable hospitali'ation and health insurance is deductible from compensation income
or business income whiche)er is applicable.
a. 2nl statement 1 is correct.
b. 2nl statement 2 is correct.
c. 9oth statements are correct.
d. 9oth statements are not correct.
10. A net taxable income of a resident citi'en sole proprietor of a proprietar educational institution is
sub$ect to a
a. #ormal tax of indi)iduals
b. 101 special tax
c. 251 special tax
d. "21 normal corporate tax
Problem 11-5 Multiple Choice
3elect the letter that contains the best answer.

1. Which of the following is the correct amoumt of personal additional exemption7
a. P50,000 for married indi)idual
b. P"2,000 for head of the famil
c. P25,000 for senior citi'en
d. P25,000 for each qualified child ;maximum of %<
2. Which of the following is the correct basic personal exemption7
a. P50,000 for single indi)idual with his parent as dependent
b. P50,000 for legall separated indi)idual, with no dependent
c. P50,000 for married indi)idual with no dependent
d. All of the abo)e
". Which of the following amount of winnings is sub$ect to final tax of 2017
a. P10,000 winnings outside the Philippines
b. P10,000 winnings earned within the Philippines
c. P1,000,000 Philippines sweepsta0es winnings
d. P-,000 first pri'e singing contest
%. All of the following taxes are classified as income taxes, except
a. 201 roalt tax
b. 101 di)idend tax
c. =1 of 11 tax on the selling price of shares of stoc0 traded in the local stoc0 exchange
d. *1 capital gain tax on sale of land
5. Which of the following is the correct income tax rate7
a. 201 di)idend income earned within b nonresident alien doing business income wit
b. 251 on gross income earned within b nonresident alien not doing business in the
Philippines
c. 251 0n more than P1,000,000 business income earned within b nonresident alien
d. 201 on P50,000 compensation income earned b senior citi'en
*. &he normal tax rate on indi)idual taxpaer is from
a. 21 to "21
b. 51 to "21
c. 51 to "51
d. 21 to "21
+. 2ne of the following indi)idual taxpaer could claim personal exemption as head of the famil
a. 3ingle, supporting a "0 ear old paraltic brother
b. Widow, with a 25 ear old son under his custod
c. >egall separated with 21 ear old sibling as qualified dependent
d. ?arried but legall separated without dependent
!. All of the following dependents will entitle the taxpaer for additional personal exemption except
a. 25 ear old, but mwentall retarded son
b. 20 ear old, unmarried daughter
c. 1! ear old, unemploed son
d. 1- ear old sister
-. Which of the following is the correct creditable withholding tax on professional income7
a. 151 on professional income of practicing lawer earning P500,000 a ear
b. 201 on professional incomeof entertainer eartning P500,000 and below per ear
c. 101 o professional income of entertainer earning more than P+20,000 per ear
d. 151 on professional income of entertainer earning more than P+20,000 per ear
11. (n the ear200-, P500,000 di)idends from a domestic corporation and@or P500,000 share in the net income
of a taxable partnership recei)ed b a citi'en is sub$ect to a final tax of
a. 151 c. 201
b. *1 d. 101
12. (f an indi)idual person is allowed to pa his tax on installment pament, the date would be
a. ?a 15 for the first installment and Aul 25 for the second installment
b. April 25 for the first nstallment and August 15 for the second installment
c. April 15 for the frst installment and Aul 15 for the second installment
d. ?a 15 for the first installment and August 15 for the second installment

Problem 11-6 Income subject to Philippine Income Tax
Auan, single, is an 2.W with a monthl income abroad amounting to P20,000. Be has a sari/sari store in the
Philippines with an a)erage monthl income of P10,000. (f Auan returned in the Philippines from ?arch 1 of the
taxable ear and staed to mange his sari/sari store,how much of his income is sub$ect to tax in the Philippines after
personal exemption7
a. P+0,000 c. P110,000
b. P100,000 d. P120,000

Problem 11- !pecial Taxpa"er
?r. 6oman Cinero ;single<, a 3paniard who is a resident general manger of 3bbot >aboratories/ a multi/national
compan,s regional operating headquarters established in the Philippines/ recei)ed a monthl salar of P250,000.

What is the amount of ?r. 6oman Cinero,s income tax paable7
a. P12,500 c. P%50,000
b. P!0,000 d. P-1!,*00


Problem 11-# Personal $xemption %Marrie& In&i'i&ual(
What would be the maximum amount of personal exemption allowed to .ilipino citi'en couple that ha)e fi)e
qualified dependent children during the taxable ear7
a. P200,000 c. P100,000
b. P150,000 d. P +5,000


Problem 11-) Personal $xemption %*e+all" !eparate&(
What would be the amount of Personal Dxemptiion allowed to a citi'en who is legall separated whose wife and
minor son are li)ing together in E3A7
a. P100,000 c. P50,000
b. P125,000 d. P+5,000


Problem 11-1, Personal $xemption %Chan+e o- !tatus(
What would be the personal exmption allowed to a citi'en whose wife died in Cecember of the taxable ear after
gi)ing birth to their son7
a. P100,000 c. P125,000
b. P +5,000 d. P 50,000


Problem 11-11 Personal an& .&&itional $xemptions
&he taxpaer is a widow who supports the following8
;a< >egitimate child b a former marriage, 12 ears oldF
;b< 6ecogni'ed natural child with present common law husband, * ears oldF
;c< 4ommon law husband who is singleF and
;d< Widowed mother ;senior citi'en< of her common law husband.
&he amount of her personal and additional exemptions is
a. P50,000 c. P100,000
b. P+5,000 d. P125,000


Problem 11-12 Personal $xemption %/eciprocit"(
?r. 6onal 9aden, an American citi'en and a resident of 4alifornia, E.3.A., has business income deri)ed in the
Philippines amounting to P500,000 for the ear. Be is married and has 2 minor children.

Bow much will be allowed as his personal exemption for the computation of his income tax in the Philippines, if his
countr,s tax law is granting the same exemption to .ilipino citi'ens, except for additional exemption where his
countr,s tax law is allowing P10,000 per dependent child,
a. P 50,000 c. P+5,000
b. P100,000 d. P /0/


Problem 11-13 !pecial 0e&uction
Bow much is the special deduction allowed for the pament of a premium on health insurance during the taxable
ear b a resident alien if the total amount paid is P",000, total famil income is P200,000 and pament was made in
the month of Cecember of the current ear, co)ering one ear period starting Cecember of the current ear of the
taxable ear.
a. P 200 c. P",000
b. P2,%00 d. P2,000


Problem 11-14 !pecial 0e&uction
?r. &rone Gelasque' has total salar of P1!0,000 , and ?rs. 5irlie Gelasque' has P120,000 income for the ear,
both earned from emploment in the Philippines.

&he paid P150 per month health insurance polic for the months of Aune to Cecember 200x. ?r. Gelasque' as head
of the famil could claim special deductions for these paments equal to
a. P -00 c. P2,%00
b. P1,!00 d. P/0/


Problem 11-15 0epen&ent 1ther than Chil&ren
?aria, ?arried and without income, recei)es her allowance amounting to P50,000 per month from her husband who
is wor0ing in 9runei as Accountant. 3he supports her two siblings and parents who are qualified as dependent
relati)es.

Bow much is the total personal and additional exemptions to ?aria7
a. P125,000 c. P50,000
b. P100,000 d. P/0/


Problem 11-16 Income o- !enior Citi2en
A senior citi'en reported compensation income of P%0,000 net of withholding tax. Bis net tax paable at the end of
the taxable ear would be
a. P/0/ c. P2,500
b. P2,000 d. P%,000


Problem 11-1 Taxpa"ers Income
H, single, reported the following income and expenses during the taxable ear8
Within Without
4ompensation (ncome P2%0,000
Professional (ncome "00,000 P200,000
(nterest (ncome 100,000 *0,000
Ci)idend (ncome *0,000 %0,000

1. What is the amount of net income sub$ect to tabular tax and final tax in the Philippines if H is a resident
.ilipino citi'en7
3ub$ect to
&abular tax .inal tax
a. P550,000 P15%,000
b. P+*0,000 P2*0,000
c. P++0,000 P1!0,000
d. P+-0,000 P1*0,000

2. What is the amount of net income sub$ect to tabular tax and final tax in the Philippines if H is a resident
alien7
3ub$ect to
&abular tax .inal &ax
a. P%-0,000 P1*0,000
b. P520,000 P220,000
c. P%10,000 P1*0,000
d. P*%0,000 P2*0,000


Problem 11-1# Income o- 3usban& an& 4i-e
&he net taxable income of husband and wife are P1%0,000 and P250,000 respecti)el. &hese incomes are net of
withholding tax amounting to P20,000 and P%5,000 respecti)el.&heir income tax still due and paable would be
Busband Wife
a. P22,500 P50,000
b. P20,000 P%5,000
c. P20,000 P22,500
d. P 2,500 P 5,000

Problem 11-1) Total Income Tax 0ue %/esi&ent alien(
?r. Drection, a married (ndian national, stas in the Phi0ippines with no definite intention. Be recei)ed P*00,000
4ompensation income as researcher of 9lue 5ood 2cean, a domestic corporation. (n addition, he in)ested in
thePhilippines some of his sa)ings earning di)idend income and interest income of P120,000 and P10,000
respecti)el.

(f the interest income is a dollar deposit under the expanded currenc deposit sstem, how much is the total income
tax due of ?r. Drection in the Philippines7;2ne dollar is P50<
a. P "+,500 c. P1%*,+*0
b. P1-0,500 d. P1-*,2*0


Problem 11-2, Capital 5ains Tax
?r. Aose ?atbagan, a citi'en and a resident of the Philippines had the stoc0 transactions during 200x8
;a< 4apital gain tax on sales directl to a buer at P2!0,000 of shares of a domestic
corporation,P!0,000
;b< 4apital gain on sale directl to a buer at P2,000,000 of land in ?a0ati, Philippines,P"00,000

&he total capital gains tax paid during the ear should be
a. P 1-,%00 c. P10!,000
b. P 22,000 d. P12%,000


Problem 11-21 Final tax an& 6ormal Tax
(n 200x, ?r. ?ar)in Dbo$o, a nati)e of Pangasinan, recei)ed during the ear the following8
Proceeds from copright roalt, net of tax P 11,250
Proceeds from mineral claim 12,000
3hare from trading partnership, net of withholding tax 2+0,000

Assume that ?r. Dbo$o is single, compute the following8

1. &he final tax on ?r. Dbo$o,s income
a. P50,000 c. P"1,250
b. P"%,250 d. P %,250

2. (ncome tax still due and paable per (&6
a. P50,000 c. P"1,250
b. P"%,250 d. P/0/


Problem 11-22 Pro-essional Income
Professional income of a GA&/registered person is sub$ect to 2utput GA& and required to be withheld with income
tax. (f the net proceeds for the ser)ices rendered is P-2,000, net of 201 withholding tax based on the ser)ice fee, the
amounts of ser)ice fee, withholding tax and GA& would be
3er)ice fee Withholding tax GA&
a. P112,000 P20,000 P12,000
b. P100,000 P20,000 P12,000
c. P -+,"-1 P1-,%+! P11,*!+
d. P "2,000 P1!,%00 P22,0!0


Problem 11-23 7arious Income
?r. 4risanto Dstrada, widower with three qualified dependent children and a practicing accountant has the following
receipts and expenditures for the calendar ear ended Cecember "1, 200-.
6eceipts8
Professional fees P 500,000
Allowance as director of 4orporation A 25,000
(nterest on time sa)ings deposits, net of 201 final tax 1*,000
4ommissions 5,000
Dxpenditures8
3alaries of Assistants P -*,000
Partial pament of loan 20,000
(nterest on the loan ;&he loan was used for the repair of the
6esidential house of ?r. Dstrada< ",!50
&ra)elling Dxpenses/business related 11,000
>ight and water/office +,!-0
>ight and water/residence *,500
3tationeries and supplies used in the office 1,-*0
2ffice rent *0,000
4ontributions exclusi)el for religious purposes "!,500

1. &he allowable deductions from the business gross income is
a. P20-,1*5 c. P212,1*5
b. P210,+25 d. P1+*,!50

2. &he net income for income tax purposes after itemi'ed deduction but before personal and additional
exemptions is
a. P"1+,!"5 c. P"20,!"5
b. P"1-,2+5 d. P"*,%5-

". &he income tax due in (&6 is
a. P5*,550 c. P"!,"50
b. P50,000 d. P"*,%5-


Problem 11-24 0etermination o- Correct Income %CP. $xamination(
Cata from the records of ?r. Alex Galde' are8
#et worth, Cecember "1, 200! P"25,000
#ontaxable income for 200- 2,000
#ondeductible expenses for 200- ;excluding
donations and contributions< 150,000
.ull deductible donations 20,000
4ontributions sub$ect to limitations 50,000
#et Worth, Cecember "1, 200- "+5,000
6eported@Ceclared net income sub$ect to tax, 200- 2%,200

6equired8 4ompute for the following8
1. &he correct income sub$ect to normal graduated tax if ?r. Galde' is a widower, with four
qualified dependent children.
2. &he unreported taxable income for the ear 200- of ?r. Galde'.

Problem 11-25 Itemi2e& 's8 1!0 %CP. $xam(
?r. 5eorge Dstrada, .ilipino resident, whose wife died during the taxable ear, has six qualified dependents. Be is a
director of a business firm from which he recei)ed per diem and allowances amounting to P20,000 during the
taxable ear. &he income tax withheld on his is P1,000.
Be also operates a hardware store which generated a gross income of P%00,000. &he total itemi'ed expense of his
business is P150,000 but he encounters difficult in determining how much of these expenses can be classified as
direct costs and deductible expenses. Be as0s ou to prepare his income tax return.

6equired8 4ompute the taxable income and tax still due paable b ?r. Dstrada using8
1. (temi'ed deduction.
2. 2ptional 3tandard Ceduction

Problem 11-26 Taxable Income %4ith Capital .sset Transactions(
&he following data are the operating results and capital assets ;not real estate, not corporate shares of stoc0<
transactions of ?r. Ao)ito 5alam, a contractor for the ears 200- and 2010.
200- 5ross receipts from contracts P1,*00,000
>ess8?aterials and supplies used P+00,000
>abor !*5,000 1,5*5,000
#et (ncome P"5,000
#et 4apital >oss 4arro)er to 2010 P%5,000

2010 5ross receipts from 4ontracts P2,550,000
>ess8 ?aterials and supplies used P1,200,000
>abor +50,00 1,-50,000
#et (ncome P*00,000
3hort term 4apital gains %0,000
>ong term 4apital 5ains "0,000
3hort term capital loss 10,000

6equired8 (f ?r. 5alam is married and has three qualified dependent children,how much is the taxable income for
the taxable income for the ear ended Cecember "1, 20107


Problem 11-2 Compensation an& 9usiness income
A resident citi'en, single with qualified dependent chi0d has the following income and expenses during the ear8

4ompensation (ncome, net of W&W P P2%0,000
1"
th
month pa 20,000
Personal Dxpenses *0,000
9usiness (ncome 100,000
9usiness Dxpense allowed 120,000
Premium on health@hospitali'ation insurance paid ",000

6equired8 4ompute the following8
1. &axable income
2. (ncome tax still due and paable per (&6

Problem 11-2# Monthl" an& :uarterl" ;ithhol&in+ taxes
?s. Aennifer 9a/on, single has thefollowing data from Aanuar to Cecember 200-8
?onthl salar P "0,000
1"
th
month pa and bonus "5,000
333 contribution ;one whole ear< ",000
?edicare@Philhealth contribution 2,000
9usiness income per quarter 200,000
9usiness Dxpense per quarter 120,000
4apital asset transactions8
Proceeds from the sale of Personal car "00,000
4ost of the car sold8
&he car,s estimated useful life is ! ears but used
b ?s. 9a/on for * ears %00,000

6equired8
4ompute the following8
1. ?onthl withholding taxes paid
2. Iuartel business income tax paid


Problem 11-2) Income tax o- Pro-essional Income
6osanna 6oses, a resident .ilipina actress, earned P1,+00.000 as an entertainment fee during the taxable ear, net of
related 151 creditable withholding tax. (n addition, she earned the following from business8
5ross 6eceipts (ncome tax paid
Philippines P500,000 P%0,000
Aapan 1,000,000 "00,000

6equired8 Assume that 6oses is single with four qualified dependent children, compute the following8
1.#et taxable income
2.(ncome tax due
".&ax credit
%.(ncome tax still due and paable


Problem 11-3, Income Tax o- 3usban& an& 4i-e
?r. and ?rs. 9ra)o li)ing with ! qualified dependent children ha)e the following income and expenses during the
taxable ear8
?r. 9ra)o ?rs. 9ra)o
4ompensation net of W&W P200,000 P250,000
Withholding tax on wages ;W&W< 25,000 50,000
Personal expenses in going to wor0 !0,000 100,000
Professional income net of withholding tax 100,000
Premium on health@hospitali'ation insurance paid 2,%00
&he couple had communal propert with a rent income of P"00,000 during the ear.
/e<uire&= 4ompute for tax still due and paable ;(&6< of ?r. and ?rs. 9ra)o.

Problem 11-31 Income Tax o- 7arious $arnin+s
An indi)idual taxpaer, married with % qualified dependent children8
4ompensation income P"00,000
1"
th
month pa and bonuses %0,000
9usiness income %00,000
9usiness expense allowed "00,000
Ci)idend income 50,000
6oalt income J literature !0,000
4apital gain/ long term *0,000
(ncome taxes paid on8
4ompensation 50,000
Iuarterl business income 20,000
Ci)idend 5,000
6oalt !,000
/e<uire&= 4ompute the following8
1. &axable income sub$ect to normal tax.
2. (ncome tax still due and paable reportable in (&6


Problem 11-32 Compensation Problem
&he following data are ta0en from the boo0s of the taxpaer8
3ales P1,000,000
4ost of sales +00,000
5ain from sale of capital assets/short term "00,000
>oss from sale of capital assets/long term %00,000
5ambling winnings 200,000
5ambling losses 250,000
4ompensation income net of tax withheld P20,000 1!0,000
1"
th
month pa, and other bonuses "5,000
Proceeds from life insurance of his mother 100,000
9usiness expenses, including robber loss of P50,000,
4ontribution to church, P*0,000,
And interest expenses, P"0,000 250,000
9ad debts reco)er, not deducted pre)iousl 20,000
>otto winnings, E3A "00,000
Personal expenses 100,000
&uition fees of children 150,000
(nterest income 20,000
/e<uire&= 4ompute the income tax still due and paable, if the taxpaer is an indi)idual .ilipino resident, married
and has % qualified dependent children.
Problem 11-33 Comprehensi'e Problem
Att. Abo 5ado, a 4PA/>awer, has the following income and related expenses during the ear 200-8
9asic salar per month as a professor P25,000
4lothing allowance J de minimis per ear %,500
1"
th
month pa 1",000
6ice subsid de J minimis per month 1,*00
Professional fees, inclusi)e of GA& 22%,000
3ales 5,000,000
4ost of sales ",200,000
2perating expenses before contribution -00,000
4ontribution to 100,000
(nterest expense ;included in the operating expenses< 50,000
(nterest income +5,000
&otal quarterl tax paid 20,000
Bealth hospitali'ation insurance paid 5,000

&he taxpaer married with six qualified dependent children.
/e<uire&8 4ompute for the following8
1. &otal nontaxable 1"
th
month pa and other benefits.
2. Dstimated withholding tax from Aanuar to #o)ember.
". &otal income tax still due and paable on Cecember "1,200-.

Problem 11-34 Comprehensi'e Problem
A taxpaer named 6amsa 4olorado, single, has the following income and expenses during the taxable ear 200-8
Philippines E3A
4ompensation income net of W& 101 P"*0,000 K2,250
(nterest income, net of W& 201 50,000 1,200
4ommission income net of W& 51 5+,000 -50
>otto winnings 100,000
Ci)idend income net of W& 101 -,000 1!00
2ne E3 dollar is equi)alent to P50. All income deri)ed without come from E3A assume that withholding tax were
applied to income deri)e within the Philippines.
/e<uire&= Cetermine the income taxes due and paable of the taxpaer assuming that he is aF
1. 6esident citi'en
2. #onresident citi'en
". #onresident alien engage in business in the PhilippinesF and
%. #onresident alien not engage in business in the Philippines.






Chapter 12
Problem 12 > 1 True or False
Write &rue if the statement is correct or .alse if the statement is incorrect.
1. A corporation does not include general professional partnership.
2. Comestic corporation includes go)ernment owned and controlled corporations.
". Comestic and foreign resident corporations are taxed on income within and without.
%. 6esident foreign corporation in the Philippines are organi'ed through the laws of foreign countr
irrespecti)e of the nationalit of the stoc0holders.
5. &he gross income deri)ed within b the nonresident foreign corporation is taxed in the Philippines with
"51 normal tax.
*. #onstoc0 and nonprofit educational institutions are exempt from the income tax.
+. After three ears of operation, the ?4(& is applicable onl to domestic and resident foreign corporation
that incurred a ner loss or 'ero taxable income or a normal income tax is lesser than the minimum income
tax.
!. &he excess of ?4(& can be carried forward as tax credit against the normal tax for the three immediatel
succeeding ears.
-. An expanded withholding tax can be deducted from ?4(&.
10. &he capital gain earned outside the Philippines b resident foreign corporation is taxable based on the
normal corporate income tax.
11. A sale of real propert b nonresident foreign corporation is sub$ect to a final tax of "51 based on gain.
12. A domestic or resident corporation,s interest income under the expanded foreign currenc deposit sstem is
sub$ect to a final tax of 101.
1". &he interest income from foreign currenc loans granted to residents is sub$ect to a passi)e income tax of
201.
Problem 12 > 2 True or False
Write &rue if the statement is correct or .alse if the statement is incorrect.
1. All proprietor educational institutions are sub$ect to a special income tax rate of 101.
2. &he capital gains on sale of land located outside the Philippines of a resident foreign corporation is sub$ect
to a capital gains tax of *1 based on the selling price or fair mar0et )alue, whiche)er is higher.
". &he offshore ban0ing units are sub$ect to 151 tax rate based on gross income.
%. 6egional operating head quarters are sub$ect to a 101 tax rate based on their taxable income.
5. &he cooperati)e is sub$ect to a 201 final tax on its interest income earned from the ban0.
*. 5o)ernment owned and controlled corporations are exempt from income tax.
+. &he applicable tax on foreign international carrier is 2 =1 of the 5ross Philippine 9illings.
!. A corporation should file a quarterl income tax return within *0 das after the end of each first three
quarters of the taxable ear.
-. &he ob$ecti)e of imposing tax on the improperl accumulated income is to force the corporation to
distribute di)idends to stoc0holders and to force corporations to expand their businesses.
10. (n)estment of substantial amount in long/term debt securities is an improper accumulation of retained
earnings.
11. (n computing the surtax, #2>42 is to be added in the income per income tax return.
12. (f the corporate income has been sub$ect to (AD&, it shall no longer be sub$ected to (AD& in later ears,
e)en if not declared as di)idend.
Problem 12 > 3 Multiple Choice
3elect the letter that contains the best answer.
1. A corporation whose income within and without the Philippines is taxable.
a. Comestic 4orporation
b. .oreign 4orporation
c. 6esident .oreign 4orporation
d. #onresident .oreign 4orporation
2. A corporation is taxable on business income after business expenses, except
a. Comestic 4orporation
b. .oreign 4orporation
c. 6esident .oreign 4orporation
d. #onresident .oreign 4orporation
". Which of the following corporation is taxed based on gross income7
a. 4ooperati)e
b. Comestic 4orporation
c. 6esident .oreign 4orporation
d. #onresident foreign 4orporation
%. What 0ind of income tax is sub$ect to 21 of corporate gross income7
a. #ormal 4orporate (ncome &ax
b. ?inimum 4orporate (ncome &ax
c. 5ross (ncome &ax
d. 4apital 5ains &ax
5. (n paing corporate income tax, the excess of minimum corporate income tax could be used as a deduction
within three immediate succeeding taxable ears and such excess could onl be deducted from
a. #ormal corporate tax
b. ?inimum corporate tax
c. 5ross income tax
d. 4apital gains tax
*. &he minimum corporate income tax shall be used in computing and paing the corporate income tax if the
corporation has been
a. (n its fourth ear
b. (ncurred net loss or 'ero taxable income
c. &he normal income tax is lesser that minimum income tax
d. All of the abo)e
+. &he gross income tax shall be applicable to
a. 3er)icing and manufacturing firms
b. ?anufacturing firms and merchandising firms
c. ?erchandising and ser)ice firms
d. All of the abo)e
!. 6oalt income deri)ed within the Philippines b a nonresident foreign corporation shall be sub$ect to
a. 201 final tax
b. +.51 final tax
c. normal corporate tax
d. minimum corporate tax
-. 4apital gains of resident foreign corporation on sale or exchange or disposition of lands and or buildings
located in the Philippines.
a. *1 of selling price or .?G whiche)er is higher
b. *1 of selling price or .?G whiche)er is lower
c. = of 11 of the selling price
d. 3ub$ect to normal corporate income tax
10. &he following corporate income are sub$ect to income tax, except,
a. 4ash di)idends recei)ed from a domestic corporation b other domestic corporation
b. 6oalt income recei)ed from a domestic corporation
c. (nterest income on foreign loans
d. (nter/corporate di)idends recei)ed b a non/resident foreign corporation form a domestic
corporation.
11. &he offshore ban0ing units of resident foreign corporations are sub$ect to 101 tax on income deri)ed from8
a. .oreign currenc transactions with local commercial ban0s
b. .oreign currenc transactions with branches of foreign ban0s authori'ed b 9ang0o 3entral
c. (nterest income deri)ed from foreign currenc loans granted to residents
d. All of the abo)e
12. &he net taxable income of regional operating headquarters b multi/national companies engaged in
administrati)e ser)ice is
a. &ax exempt
b. 3ub$ect to 101 income tax
c. 3ub$ect to 151 final tax
d. 3ub$ect to "51 corporate tax
1". &he tax imposed on intercorporate di)idends recei)ed b a domestic corporation from a resident foreign
corporation is
a. &ax exempt
b. 3ub$ect to 101 income tax
c. 3ub$ect to 151 final tax
d. 3ub$ect to "51 corporate tax
Problem 12 > 4 Multiple Choice
3elect the letter that contains the best answer.
1. .or taxation purposes, the following are nontaxable corporation, except
a. 333
b. 5eneral professional partnership
c. 5eneral commercial partnership
d. PA5426
2. &he following are corporations exempt from income tax, except
a. #on/stoc0 and non/profit educational institutions
b. 5o)ernment owned and controlled corporations
c. 4CA registered cooperati)es
d. 5o)ernment educational institution
". &he business income of a domestic corporation is sub$ect to an of the following except
a. ?inimum corporate income tax
b. #ormal corporate tax
c. 2ptional gross income tax
d. .inal withholding tax
%. All of the following are sub$ect to minimum corporate income tax except
a. #onresident foreign corporation
b. 5eneral commercial partnership
c. 6esident foreign corporation
d. Comestic corporation
5. &he excess of minimum corporate income tax o)er the normal income tax is deductible from normal
income tax for the succeeding
a. 1
st
ear
b. 2 ears
c. " ears
d. 5 ears
*. Which of the following is not correct income tax7
a. ?inimum corporate income tax on domestic corporation incurring operating loss for the ear.
b. "51 income tax on the net taxable business income of resident foreign corporation
c. 101 income tax on proprietar educational institution
d. Lero income tax on business income of go)ernment owned and controlled corporation
+. &he following is correct income tax, except
a. 251 on gross income within earned b nonresident foreign cinematographic film owner
b. 251 on gross receipts within recei)ed b foreign international carrier
c. %.%1 on gross income within earned b nonresident lessor of )essel chartered b Philippine
nationals
d. +.5 on gross income earned within b nonresident foreign lessor of aircraft
!. &he tax imposed on intercorporate di)idends recei)ed b a nonresident foreign corporation from a domestic
corporation is
a. &ax exempt
b. 3ub$ect to 101 income tax
c. 3ub$ect to 151 final tax
d. 3ub$ect to "51 corporate tax
-. 6oalt income earned within the Philippines b a nonresident foreign corporation is
a. &ax exempt
b. 3ub$ect to 101 income tax
c. 3ub$ect to 151 final tax
d. 3ub$ect to "51 corporate tax
10. 4CA registered cooperati)es are income tax exempt, except on
a. (ncome form business transacted with non/members
b. (nterest income from depositor ban0
c. (ncome from business transacted with members
d. (nterest income earned from member,s loan
11. 3tatement 18 A domestic corporation sub$ected to normal corporate income tax is exempt from (mproperl
Accumulated Darning &ax
3tatement 28 9oth domestic and resident foreign corporations are sub$ect to improperl accumulated
earning tax.
a. onl statement 1 is correct
b. onl statement 2 is correct
c. both statements are correct
d. both statements are not correct
12. 3tatement 18 2nce a profit has been sub$ected to (AD&, the same shall no longer be sub$ected to (AD& in
the later ears.
3tatement 28 #onresident corporation,s interest income on foreign loans contracted on or after August 1,
1-!* is sub$ect to 201 final withholding tax.
a. onl statement 1 is correct
b. onl statement 2 is correct
c. both statements are correct
d. both statements are not correct
Problem 12 > 5 Income Tax !itus
&he following income and expenses are shown b H corporation8
Within 2utside
5ross income P!,000,000 P%,000,000
9usiness expenses ",500,000 ",000,000
3ale of >and ;capital asset, cost P2,000,000< ",000,000
1. (f H is a domestic corporation, how much is the taxable income and income tax due in the Philippines per
annual (&67
&axable (ncome (ncome &ax Cue
a. P",000,000 P1,050,000
b. P%,000,000 P1,%00,000
c. P5,000,000 P1,+50,000
d. P%,000,000 P1,200,000
2. (f H is a resident foreing corporation, how much is the taxable income and income tax due in the
Philippines per annual (&67
&axable (ncome (ncome &ax Cue
a. P",000,000 P1,050,000
b. P%,000,000 P1,200,000
c. P",000,000 P -00,000
d. P+,000,000 P2,%50,000
Problem 12 > 6 Income Tax !itus
&he A94 corporation has the following income and deductions for the calendar ear 200-8
3ources of income gross income deductions
Philippines P2,!00,000 P1,"00,000
E3A 1,100,000 *00,000
3audi Arabia %00,000 500,000
(f A94 4orporation is a resident foreign corporation, the Philippine income tax due for 200- is
a. P1+5,000 c. P525,000
b. P%50,000 d. P+00,000
Problem 12 > Income Tax !itus
Enicor is a nonresident foreign corporation. .or the fiscal ear ending ?arch "1, 2010, it had the following income
deductions8
5ross income Dxpenses
.rom the Philippines P 5,000,000
.rom the E3A *0,000,000 P"0,000,000
&he Philippine income tax paable Enicor for the fiscal ear April 1, 200- to ?arch "1, 2010 is
a. P12,250,000 c. P1,+50,000
b. P10,500,000 d. P1,500,000
Problem 12 > # 0omestic 's8 Forei+n Corporation
&he &acurong 4orporation has the following business income and deductions in ear 200-8
.rom Philippines sources8 5ross income Ceductions
.rom business P%50,000 P2-0,000
Ci)idends from domestic corporations !0,000
.rom other countries8
3audi Arabia P1!0,000 P !0,000
Australia +5,000 25,000
Aapan 1*0,000 100,000
&otal foreign income tax is P100,000
/e<uire&= 4ompute the income still tax due and paable if &acurong 4orporation is a
a. Comestic corporation
b. 6esident .oreign 4orporation
Problem 12 > ) Tax-$xempt Corporations
&he Philippine 5o)ernment maintains the following corporations with the following gross income and expenses8
5ross income Dxpenses
Eni)ersit of the Philippines P50,000,000 P%+,000,000
53(3 *0,000,000 55,000,000
PA5426 "0,000,000 2!,000,000
Bow much is the income tax due that can be collected b the Philippine 5o)ernment7
a. P J 0 J c. P*00,000
b. P+00,000 d. P",500,000
Problem 12 > 1, Tax-$xempt Corporations
&he following domestic corporations reported the following net income for operations8
Philippine 4harit 3weepsta0es P10,000,000
#ational Power 4orporation !,000,000
E#>AC 4ooperati)e *,000,000
#ational 9oo0store 5,000,000
9aguio 4olleges .oundation %,000,000
Bow much income tax due that can be collected b the Philippine 5o)ernment7
a. P*,"00,000 c. P2,!00,000
b. P5,%00,000 d. P J 0 J
Problem 12 > 11 6ormal Corporate Income Tax
A 4orporation, a domestic corporation, shows the following data for the taxable ear 200-8
5ross sales P",000,000
5ain on sale of real propert, net of capital gains tax -%0,000
5ross Profit 1,*00,000
Ci)idend income ;domestic< 200,000
2perating expenses including charitable contribution *00,000
4haritable contribution 50,000
&he income tax due and paable would be8
a. P%-",500 c. P"50,000
b. P%20,000 d. P"00,000
Problem 12 > 12 MCIT 's8 6CIT
2n its 5
th
ear of operation, a domestic corporation reported an operating loss of P200,000 after operating expenses
of P1,000,000. (ts income tax paable for the period is
a. P+0,000 c. P20,000
b. P2%,000 d. P1*,000
Problem 12 > 13 MCIT 's8 6CIT
A ten/ear domestic corporation reported in ear 2005 a net income before tax, under 5AAP amounting to
P5,000,000. &his amount is net of operating expenses which includes allowance for bad debts of P150,000 and
actual contribution to go)ernment for public purposes of P"00,000.
1. What is the amount of income tax due and paable7
a. P1,55",000 c. P1,+00,000
b. P1,*5*,000 d. 1,!12,125
2. Bow much would be the income tax due if the total amount of the total operating expenses per 5AAP is
P!0,000,0007
a. P J 0 J c. P1,+00,000
b. 1,*5*,!00 d. P1,!12,125
Problem 12 > 14 $xcess o- MCIT
&he outstanding balance of excess of ?4(& o)er normal tax in prior period is P100,000. Curing the current taxable
ear, the corporation has gross income of P!,000,000 and operating expenses of P+,!50,000.
1. &he income tax paable for the current ear is
a. P1*0,000 c. P*0,000
b. P100,000 d. P52,000
2. Assuming that the operating expenses is P+,000,000 instead of P+,!50,000, the income tax paable for the
current ear is
a. P"50,000 c, P200,000
b. 250,000 d. P1*0,000
Problem 12 > 15 0e-erre& Char+es MCIT
(n ear 5, Araboho0 4orporation pro)ided the following data8
;in thousand of pesos<
:ear " :ear % :ear 5
5ross profit J business P1,000,000 P1,200,000 P1,500,000
9usiness expenses ;1,500,000< ;1,000,000< ;1,000,000<
(ncome ;loss< ;P 500,000< P 200,000 P 500,000
Assume that the corporation has been existing for fi)e ears, what is the amount of deferred charges ?4(&
applicable for ear %7
a. P J 0 J c. P 20,000
b. P15,000 d. P;20,000<
Problem 12 > 16 $xpan&e& 4ithhol&in+ Tax
6 4orporation, a real estate lessor, collected rental income amounting to P1,-00,000, net of 51 expanded
withholding tax. &otal operating expenses of the business amounted P2,"50,000. &he corporation has a capital gain
amounting to P500,000, not sub$ected to capital gains tax.
Bow much is the amount of income tax paable and tax refund if the excess of ?4(& o)er #4(& in the pre)ious
ear amounted to P%0,0007
(ncome &ax Paable &ax refund
a. P52,500 P !+,500
b. P50,000 P100,000
c. P%5,000 P -5,000
d. P J 0 J P !+,500
Problem 12 > 1 In'estment in /eal Propert"
A domestic corporation sold its in)estment in real propert carried at cost of P1,000,000 for P1,500,000. &he related
income tax on sale of real propert would be
a. P J 0 J c. P-0,000
b. P"0,000 d. P1+5,000
Problem 12 > 1# Tax on Capital .ssets
3tar 4orporation has the following sales of capital assets transactions for 200x8
a. 3old 12,000 in)estment in common shares of stoc0 not traded in the local stoc0 exchange for P1,*00,000.
&he cost per stoc0 is P110.
b. 3old 5,000 in)estment in preferred stoc0 traded in the local stoc0 exchange for P1,!00,000. &he cost per
stoc0 is P"00.
c. 3old land located in Aapan for P",000,000. &he cost of the land is P2,500,000.
d. 3old land located in the Philippines for P1,000,000. &he cost of land is P-00,000 with a fair mar0et )alue
of P1,200,000.
3tar Ciamond 4orporation,s taxes paable ;income tax and percentage tax< on sales of capital assets assuming the
taxpaer is8
1. Comestic corporation ;C4<.
a. P25%,000 c. P2*-,000
b. P2*%,000 d. P2+-,000
2. 6esident .oreign 4orporation ;6.4<.
a. P10%,000 c. P!-,000
b. P-%,000 d. P+-,000
". #onresident foreign corporation ;#6.4<.
a. P10%,000 c. P!-,000
b. P-%,000 d. P J 0 J
Problem 12 > 1) Final Passi'e Income .ssets
3an ?iguel 4orporation, a domestic corporation, has earned the following passi)e income within the Philippines for
the taxable ear 200-8
(nterest income from sa)ings P",000,000
6oalt income 1,000,000
(nterest from depositor ban0 under expanded foreign currenc deposit ;K"0,000 at P50 per K< 1,500,000
Ci)idends from Aollibee, a domestic corporation 200,000
Ci)idends from ?icrosoft, a nonresident foreign corporation !00,000
What is the total amount of final taxes on passi)e income sub$ect to final tax7
a. P!00,000 c. P-12,500
b. P!!0,000 d. P--2,500
Problem 12 > 2, Passi'e Income Taxes
3il)er 4orporation has the following passi)e income within for the ear 200-8
(nterest from depositor ban0 under expanded .4C3 K 20,000
6oalt income from mining P"00,000
6oalt income from franchising 100,000
(nterest income peso sa)ings deposit !0,000
2ne dollar is P50.
4ompute the passi)e income taxes of 3il)er 4orporation assuming that the corporation is a8
1. Comestic corporation.
a. P2-*,000 c. P-*,000
b. P1+1,000 d. P!*,000
2. 6esident .oreign 4orporation.
a. P2-*,000 c. P-*,000
b. P1+1,000 d. P!*,000
". #onresident foreign corporation.
a. P2-*,000 c. P1*!,000
b. P1+1,000 d. P1%%,000
Problem 12 > 21 Final an& 6ormal Income Taxes
A Philippine 4ommercial 9an0 has been authori'ed to operate a .oreign 4urrenc Ceposit Enit b the 93P had the
following re)enue and expenses8
a. Ci)idend income from ?agnolia, a domestic corporation at P1,000,000.
b. (nterest income on E3 dollar loans from resident borrowers at K",000. ;K1 M P50<
c. (nterest on Philippine peso loans from borrowers at P2,000,000.
d. 2perating expenses of P-00,000.
1. What is the total amount of normal corporate income tax of Philippine 4ommercial 9an07
a. P15,000 c. P115,000
b. P"0,000 d. P215,000
2. What is the total amount of normal corporate income tax of Philippine 4ommercial 9an07
a. P%0,000 c. P"!5,000
b. P""0,000 d. P%"+,500
Problem 12 > 22 $&ucational Institution
A proprietar educational institution reported an educational related income of P1,000,000 and other business
income of P1,500,000. (ts total operating expenses amount to P",000,000. (ts income tax paable for the period is
a. P50,000 c. ;P1+5,000<
b. ;P%0,000< d. P J 0 J
Problem 12 > 23 6onpro-it $&ucational Institution
3>E is a nonstoc0, nonprofit educational institution. .or the taxable ear, it reported the following re)enue8
&uition fee P5,000,000
Enrelated business income 2,000,000
2perating expenses %,000,000
&he amount of income tax for the period would be
a. P J 0 J c. P"00,000
b. P100,000 d. P1,050,000
Problem 12 > 24 5o'ernment $&ucational Institution
A go)ernment owned and controlled institution reported an educational related income of P1,000,000 and other
business income of P1,500,000. (ts operating expenses amounted to P",000,000. (ts income tax paable for the
period is
a. P50,000 c. ;P1*0,000<
b. ;P50,000< d. P J 0 J
Problem 12 > 25 Forei+n International Carrier
A resident foreign international carrier has the following data for the current ear8 5ross income of P+00,00 and
expenses of P200,000 from the PhilippinesF 5ross income of P500,000 and expenses of P100,000 from Bong0ong.
What is the amount of income tax paable in the Philippines7
a. P210,000 c. P1*0,000
b. P1+,500 d. P"0,000
Problem 12 > 26 Forei+n International Carrier
.l Borse is a resident foreign international carrier. (ts records of income and expenses are as follows8
a. 4ontinuous flight from ?anila to 9ei$ing M 2,000 tic0ets at P5,000 per tic0et.
b. &ic0et sold for flight from ?anila to Bong0ong8 transfer flight from Bong0ong to 9ei$ing M %,000 tic0ets at
P*,000 per tic0et.
c. Cirect flight from ?anila to Bong0ong M 2,000 tic0ets at P,"000 per tic0et.
d. &otal operating expenses is P10,000,000.
What is the amount of .l Borse,s income tax paable in the Philippines7
a. P+00,000 c. P*,"00,000
b. P+50,000 d. +,"50,000
Problem 12 > 2 !pecial 6onresi&ent Forei+n Corporation
&he following nonresident foreign corporations operate in the Philippines with their respecti)e income and
expenses8
A. Cragon .ilm, cinematographic film distributor8
Within 2utside
5ross 6eceipts P10,000,000 P200,000,000
4ost of .ilm distributed *,000,000 120,000,000
2perating expenses ",000,000 50,000,000
9. American Aircraft, a lessor of airplanes to the Philippine Airlines
Within 2utside
5ross income P20,000,000 P100,000,000
2perating expenses 15,000,000 !0,000,000
What is the amount of Philippine income taxes to be paid b Cragon .ilm and American Aircraft7
Cragon .ilm American Aircraft
a. P2,500,000 P"+5,000
b. P1,000,000 P225,000
c. P1,000,000 P1,500,000
d. P250,000 P1,250,000
Problem 12 > 2# Cooperati'e
A multi/purpose cooperati)e, registered with 4CA reported a business income of P500,000, operating expenses of
P"00,000 and interest income of P!0,000, net of 201 final tax. (ts income tax would be
a. P+0,000 c. P1*,000
b. P20,000 d. P J 0 J
Problem 12 > 2) Cooperati'e
Enlad 4ooperati)e is registered with 4CA reported the following business income and expenses8
3ale of land ;classified as ordinar asset< to its members P!00,000
3ale of groceries to its members -00,000
(nterest income from its members *00,000
Ci)idend income from Aollibee *0,000
4ost of land sold +00,000
4ost of groceries 500,000
2perating expenses %00,000
(nterest expenses on loan for expansion 100,000
What is the amount of income tax of Enlad 4ooperati)e7
a. P J 0 J c. P*0,000
b. P%!,000 d. P1+5,000
Problem 12 > 3, :uarterl" Income Tax
A domestic corporation has the following data8
Dxcess tax credits from 200- P 10,000
.or ear 2010 ;cumulati)e amount<8 1
st
Iuarter 2
nd
Iuarter
(ncome, net of 11 withholding tax P%-5,000 P+-2,000
Ceductions %!0,000 +00,000
Bow much is the income tax still due and paable in the second quarter7
a. P1!,000 c. P10,000
b. P15,000 d. P*,000
Problem 12 > 31 Tax on Interest Income
A domestic corporation reported the following income within before tax8
9usiness income P1,000,000
9usiness Dxpenses -00,000
(nterest income from peso sa)ings ban0 100,000
(nterest income from expanded foreign currenc deposit 100,000
(ts total income tax is
a. P105,000 c. P5+,500
b. P+0,000 d. P55,000
Problem 12 > 32 Tax on Interest Income
A nonresident foreign corporation reported the following income within before tax8
(nterest income from peso sa)ings ban0 P 100,000
(nterest income from expanded foreign currenc deposit 100,000
(ts total income tax is
a. P+0,000 c. P"0,000
b. P"5,000 d. P J 0 J
Problem 12 > 33 0i'i&en& Income Tax
A resident foreign corporation reported the following income before income tax8
4ash di)idend from domestic corporation P100,000
4ash di)idend from a resident foreign corporation with 1001 earnings in the Philippines 100,000
(ts total income tax is
a. P+0,000 c. P"0,000
b. P%0,000 d. &ax/exempt
Problem 12 > 34 0i'i&en& Income Tax
A nonresident foreign corporation earned the following income before income tax8
4ash di)idend from domestic corporation P100,000
4ash di)idend from a resident foreign corporation, %01 earned within 100,000
(ts total income tax is
a. P*%,000 c. P"0,000
b. P%0,000 d. P20,000
Problem 12 > 35 Passi'e Income Tax
A resident foreign corporation reported an interest income of P100,000F roalt income of P200,000 and cash
di)idend of P500,000 all earned outside the Philippines.
9ased on the earnings presented, how much is the total income tax paable in the Philippines7
a. P1*0,000 c. P*0,000
b. P100,000 d. P J 0 J
Problem 12 > 36 Passi'e Income Tax
Abbott 4orporation, a resident foreign corporation, has earned the following passi)e income for the taxable ear
200x8
(nterest from sa)ings deposits J ?etroban0 P",000,000
6oalt income J Philippine ?ining 4ompan 1,000,000
(nterest from a depositor ban0 under expanded foreign currenc deposit
;K"0,000 at P50 per E3 dollar J P4( 9an0< 1,500,000
Ci)idends from Aollibee, a domestic corporation 200,000
Ci)idends from Herxes, a resident foreign corporation ;income within< 500,000
Ci)idends from ?icrosoft, a nonresident foreign corporation !00,000
/e<uire&= Bow much is the total final passi)e income tax for the ear 200x7
Problem 12 > 3 :uarterl" Income Tax
?asi0ap 4orporation, a domestic corporation, has the following information regarding its income and expenses for
the taxable ear 200-8
I E A 6 & D 6 3
.irst 3econd &hird .ourth
3ales P1,000,000 P1,500,000 P2,200,000 P2,!00,000
4ost of 3ales *00,000 -00,000 1,"20,000 1,*!0,000
(temi'ed deductions "20,000 %!0,000 +0%,000 !-*,000
Assume that the amounts are cumulati)e for first quarter to fourth quarter, the income tax credit and income tax still
due and paable in the fourth quarter would be
(ncome tax credit (ncome tax still due
a. P5*,"20 P15,"*0
b. P*1,*00 P1*,!00
c. P52,!00 P1%,%00
d. P*1,*00 ;P"-,200<
Problem 12 > 3# .mount subject to !urtax %I.$T(
&he following data are ta0en from the records of Panda0 4orporation8
(ncome tax per annual income tax return P"00,000
(ncome tax for the first three quarters 2%0,000
.inal tax on passi)e income at 201 *0,000
4apital gain tax at 51, 101 "5,000
What is the amount sub$ect to surtax if the abo)e taxes were paid during the taxable ear7
a. P1,255,000 c. P1,"05,000
b. P1,2!5,000 d. P1,000,000
Problem 12 > 3) Tax Cre&it
(ntern 4orporation, a domestic corporation, has the following data for calendar ear 200-. &he corporation signified
its intention to claim tax credits on income taxes paid to foreign countries.
4ountr 5ross income Allowed Ceduction (ncome tax paid
Philippines P1,000,000 P!00,000
Enited 3tates %00,000 200,000 P!0,000
Aapan "00,000 200,000 "0,000
/e<uire&= 4ompute the income tax still due in the Philippines.
Problem 12 > 4, Income a-ter Tax
A domestic corporation reported a net income before normal tax of P10,000,000. &his amount includes the
following8
1. 5ain from sale of shares of stoc0s in the local stoc0s in the local stoc0 exchange, net of P5,000 percentage
tax J P25,000.
2. >oss from sale of shares of stoc0s outside stoc0 mar0et J P5,000.
". 5ain from sale of short/term debt securities J P10,000.
%. 3ale of real propert not related in business, net of final withholding tax ;cost, P%,%00,000< J P-,%00,000.
/e<uire&= 4ompute the total income after normal tax.
Problem 12 > 41 Income Tax /e-un&able?Pa"able
A tra)el agenc is earning its income at 51 of total collections from plane tic0ets sold. (ts collections are made
through credit card which imposes "1 ser)ices charges. &he credit card compan withholds =1 of total collectibles
as expanded withholding tax on income of tra)el agenc.
Curing the ear, the total re)enue is P1,000,000, and the total operating expenses reported b the tra)el agenc
amounted to P10,000.
/e<uire&= 4ompute for the net income tax refundable@paable b the tra)el agenc.
Problem 12 > 42 Improperl" .ccumulate& Income
A94 4orporation, a domestic corporation was determined to ha)e improperl accumulated earnings for the taxable
ear 200x based on its records as follows8
&axable income at normal tax rate P-00,000
Ci)idends actuall or constructi)el paid 150,000
(ncome tax paid for the ear 200,000
(ncome sub$ect to final tax *0,000
(ncome exempt from tax 50,000
(ncome excluded from gross income 10,000
Amount of #2>42 deducted 50,000
/e<uire&= 4ompute the tax on improperl accumulated income.
Problem 12 > 43 Computation o- !urtax
P 4orporation showed the following income tax paid for a taxable ear8
(ncome tax per annual income tax return P%50,000
(ncome tax for the first three quarters %20,000
.inal tax on passi)e income at +.51 "+,500
4apital gain tax on shares sold outside the stoc0 exchange %0,000
(f it is determined that P 4orporation has an unreasonable accumulated income, what is the corresponding surtax if
the said taxes were paid during the taxable ear7
Problem 12 > 44 Income Tax o- $&ucational Institution
Eni)ersit of the Philippines, 9aguio reported the following8
&uition and miscellaneous fees P5,000,000
6ental income ;not related to educational acti)ities< *,000,000
5ain from capital assets ;long term< 100,000
>oss on capital assets ;short term< 20,000
9usiness expenses, inclusi)e of P50,000 allowance for uncollectible accounts 10,050,000
?iscellaneous income 20,000
/e<uire&= 4ompute for the income tax, assuming that the school has been in existence for more than fi)e
ears.
Problem 12 > 45 Income Tax o- $&ucational Institution
&he following information came from the records of the 4ordillera Eni)ersit, (nc., a pri)ate educational institution
for the fiscal ear ended ?a "1, 200x8
(ncome8 ?iscellaneous fees P "*2,*00
&uition fees 2,!%",100
(ncome from rents *0,000
#et income, school canteen "*,200
#et income, boo0 store 2%,!00
Ci)idends 15,000
(nterest on time deposits %5,000
Dxpenses8 Paroll and administrati)e salar 1,%25,%20
2ther operating expense +*2,""0
(nterest on P+50,000 ban0 loan !2,100
Cepreciation, new six room building "+,500
(n the first month of the fiscal ear, the school secured a loan from a ban0 in the amount of P+50,000. &he proceeds
of the loan were spent in the construction of a new six/room building.
/e<uire&= 4ompute the income tax paable for 200x.
Problem 12 > 46 !urtax %I.$T(
&he retained earnings of the Panda 4orporation at the start of the ear has a credit balance of P2,500,000 which is
equal to its paid/in capital. Curing the ear, the corporation reported the following data but no di)idend income was
distributed8
#et income after tax of "01 P1,050,000
(nterest income, net of 201 final tax 120,000
4apital gain on shares of stoc0 net of income tax 2"0,000
(ncome tax paid for the first " quarters "50,000
#2>42 deducted from taxable operating income 100,000
/e<uire&= 4ompute for the following8
1. &otal (ncome for 5AAP reporting.
2. &otal income tax paid for the ear, before (AD&.
". 5AAP income after tax.
%. &otal (AD&.
Problem 12 > 4 /econciliation -rom 5..P to Tax Co&e /eportin+
&he income statement of H 4orporation prepared under 5AAP rules is as follows8
3ales P10,000,000
>ess8 4ost of 3ales *,000,000
5ross profit P %,000.000
>ess8 2perating expenses8
3alaries P1,000,000
Ceprecation "00,000
3upplies 200,000
9ad debts ;percent of accounts recei)able< 100,000
(nterest expense 50,000 1,*50,000
2perating (ncome P2,"50,000
Add8 2ther 6e)enues8
(nterest (ncome, net of tax P "2,000
4ash di)idend ;domestic< *!,000 100,000
(ncome before other expenses P2,%50,000
>ess8 >osses in in)estment in securities 250,000
#et income before tax P2,200,000
/e<uire&= Cetermine the correct amount of the following8
1. 6eportable income per (&6
2. #et taxable income per (&6
". .inal withholding tax paid