SS12-A4

REPORTING: INCOME TAX, COMPUTATION OF

INDIVIDUAL INCOME TAX

Submitted By:
GROUP 8
Leader: Gianan, Jasmine Jean G.
Members:
Elbao, John Nikko
Fornesa, Andreo
Gelvez, Nuelle S.
Guiao, John Michael

Submitted To:
Dr.Teresita Bbuenvenida

Date Submitted:
May 12, 2013

TRUE or FALSE:
1. If youre a businessman your income tax expense is
not computed using a graduated tax rate.
2. The personal exemptions for dependents is P50,000.
3. The personal exemption for the head of the family is
50,000.
4. Itemized deductions do not include expenses.
5. Certificate of income payments not subjected to
withoutholding tax is not a requirement for paying
the tax.
6. The fiscal adequacy talks about the sources of tax
revenue should coincide.
7. One of the factors that increases your talks is the
allowances.
8. One of the factors that decrease your tax is SSS
contribution.
9. On paying tax you should have a tax table.
10.One of the categories of income of individual is its
compensation income.

IDENTIFICATION
1.)
It is a direct tax levied on income of a person. A
person means a natural person , a non-registered
ordinary person, a non-juristic body of person and
undistributed.

2.)
Is an individual who is not a citizen of the
Philippines but whose residence is within the
Philippines
3.)
Is an individual who is not a citizen of the
Philippines and whose residence is not within the
Philippines
4.)
An amount not exceeding 40% of the net sales
for individuals and gross income for corporations.
5.)
What is the formula for Withholding Tax.
6-8.) What are the 3 Basic Principles of Sound Tax
System
9.) consists of business and/or trade income, fees from
the exercise of profession, gains from sale or exchange
of assets, commissions, rental income, and other
incomes not covered by compensation income.
10.) consists of income arising from employeremployee relationship such as salaries, wages,
emoluments and honoraria, commissions, taxable
bonuses and fringe benefits, taxable allowances.

Multiple-Choice
1. Adjusted gross income is used in establishing limits on
the following deductions, except?
a. charitable contributions.
b. casualty losses.

c. employee business expenses reimbursed by the

employer.
d. medical expenses.
2. An activity is presumed to be a profit-making activity
rather than a hobby if the
a. activity shows a profit for any three out of five
years, ending with the tax year in question.
b. activity shows a profit for any two out of five
years, ending with the tax year in question.
c. taxpayer conducts the activity with some
expertise.
d. taxpayer conducts the activity in a businesslike
manner.
3. Jared receives a Php5,000 scholarship to Carter
College. Jared's expenses for tuition and books amount
to Php1,200 during the semester. He would report
taxable income of
a. Php5,000
b. Php3,800
c. Php2,500
d. Php0
4. Which of the following is classified as passive income?
a. Bonus income
b. Gain on the sale of real estate
c. Interest income
d. Income from a limited partnership

5. As a result of a lawsuit, Catherine was awarded

Php300,000 for compensatory damages and Php400,000
for punitive damages. What is the taxable income
resulting from this suit?
a. Php0
b. Php300,000
c. Php400,000
d. Php700,000

Problems Solving
1. In addition to social security benefits of Php6,000,
Mr. and Mrs. Lopez have adjusted gross income of
Php36,000, tax-exempt interest of Php1,000 and will
file a joint return.Determine the taxable portion of
their social security benefits.(5pts)
2. Lucy purchased a rental house a few years ago for
Php100,000. Total depreciation to date is
Php35,000. In the current year, she sells the house
for Php155,000 and pays Php10,000 selling
expenses.Calculate Lucy's gain on the sale. (5pts)
3. Tom dies in January of the current year and leaves
his wife Jeanne a Php50,000 insurance policy.
Jeanne elects to receive the proceeds at Php10,000
per year plus interest, for five years. In the current
year, she receives Php12,000 (Php10,000 plus

Php2,000 interest).How much must Jeanne include

in her gross income? (5pts)

ANSWERS:
TRUE or FALSE
1. FALSE
2. TRUE
3. TRUE
4. FALSE
5. FALSE
6. TRUE
7. FALSE
8. TRUE
9. TRUE
10.TRUE

IDENTIFICATION
1.) Individual Income Tax
2.) Resident alien
3.) Non-resident alien
4.) Optional Standard Deduction
5.) Withholding Tax = ( ([Taxable Income] [Bracket or Exemption] ) x [%over] ) + [Bracket
Tax or Base Tax]

6-8.) Fiscal Adequacy, Theoretical Justice,

Administrative Feasibility
9.) Business income and income from profession
10.) Compensation income

MULTIPLE CHOISE
1. C
2. A
3. B
4. D
5. C

PROBLEM SOLVING
6. (Php36,000 + Php1,000 + Php3,000) - Php32,000 =
Php8,000 x .50 = Php4,000 which is
subject to the
ceiling limit of one-half of social security benefits, which
is Php3,000.
7. Amount realized (Php155,000 - Php10,000) =
Php145,000
Adjusted basis (Php100,000 - Php35,000) =
Php65,000
Taxable gain Php80,000
8. Php2,000