CHAPTER 3 PROBLEMS

Problem 1 Taxable Net Income

1 ₱ 975,000.00
2 ₱ 476,900.00
3 ₱ 1,323,333.33
4 ₱ 1,006,666.67
5 ₱ 2,796,875.00

Problem 2
Salaries ₱ 578,000.00
Gain from Sale ₱ 25,000.00
Taxable Net Income ₱ 603,000.00

Income Tax Due ₱ 80,750.00

Problem 3
NRCEB Philippines
Employment Income ₱ 480,000.00
Business Income ₱ 970,000.00
Other Income ₱ 120,500.00
Business Expenses ₱ 518,925.00
Taxable Net Income ₱ 1,051,575.00

Income Tax Due ₱ 205,472.50

RC Philippines
Employment Income ₱ 480,000.00
Business Income ₱ 970,000.00
Other Income ₱ 120,500.00
Business Expenses ₱ 518,925.00
Taxable Net Income ₱ 1,051,575.00

Taxable Net Income World ₱ 1,798,625.00

Income Tax Due ₱ 429,587.50

Problem 8

Salaries ₱ 7,440,000.00
Allowances ₱ 180,000.00
Commission Income ₱ 100,000.00
Net Business Income ₱ 894,000.00
Other Income ₱ 210,000.00
Taxable Net Income ₱ 8,824,000.00

Income Tax Due ₱ 2,698,400.00

Problem 9 SAFE

Regular salary ₱ 3,000,000.00

Overtime Pay ₱ 185,000.00
Taxable Net Income ₱ 3,185,000.00

Income Tax Due ₱ 477,750.00

Problem 10 MINIMUM WAGE EARNER

Commission Income ₱ 300,000.00

Gain from sale of laptop ₱ 16,500.00
Transportation Allowance ₱ 36,000.00
Taxable Net Income ₱ 352,500.00

Income Tax Due ₱ 20,500.00

Problem 11

Net Business Income from canteen ₱ 330,000.00

Taxable Net Income ₱ 330,000.00

Income Tax Due ₱ 16,000.00

Problem 12 TAXABLE TRUST

Gross Income of the estate ₱ 980,000.00

Allowed deduction -₱ 364,000.00
Income from estate distributed to the son -₱ 175,000.00
Income from estate distributed to the daughter -₱ 150,000.00
Taxable Net Income from Trust ₱ 291,000.00

Income Tax Due ₱ 8,200.00

Daughter
Income from Estate ₱ 150,000.00
Net Business Income ₱ 307,000.00
Compensation Income ₱ -
Other Income subject to basic income tax ₱ 26,000.00
Taxable Net Income ₱ 483,000.00

Income Tax Due ₱ 50,750.00

Income Tax Credit (15% of Income from Estate) ₱ 22,500.00
Income Tax Payable ₱ 28,250.00
Income Tax Due
₱ 182,500.00
₱ 49,225.00
₱ 287,000.00
₱ 192,000.00
₱ 745,000.00

Abroad
₱ 510,600.00
₱ 720,000.00
₱ 36,450.00
₱ 520,000.00
₱ 747,050.00
Son
₱ 175,000.00
₱ 283,500.00
₱ 450,000.00
₱ 18,200.00
₱ 926,700.00

₱ 168,010.00
₱ 26,250.00
₱ 141,760.00
Problem 4
Father
Compensation Income ₱ 390,000.00
Business Income ₱ 960,000.00
Other Income ₱ 20,000.00
Business Expenses ₱ 500,000.00
Taxable Net Income ₱ 870,000.00

Income Tax Due ₱ 151,000.00

Problem 5
Husband
Compensation Income ₱ 480,000.00
Business Income ₱ 980,000.00
Other Income ₱ 20,000.00
Business Expenses ₱ 640,000.00
Other Business Expenses ₱ 37,500.00
Taxable Net Income ₱ 802,500.00

Income Tax Due ₱ 130,750.00

Problem 6
Philippines
Gross Profit ₱ 950,000.00
Gain from sale of business assets ₱ 60,000.00
Business Expenses ₱ 565,000.00
Taxable Net Income ₱ 445,000.00

Taxable Net Income World ₱ 858,000.00

Income Tax Due ₱ 147,400.00

Problem 7

Compensation Income from Employment ₱ 696,000.00

Business Income (Net loss) ₱ -
Income from sale of jewelry (not included) ₱ -
Taxable Net Income ₱ 696,000.00

Income Tax Due ₱ 104,000.00

Problem 13 TAXABLE TRUST

Gross Income ₱ 750,000.00

Allowed Expenses -₱ 385,000.00
Income given to Mr. R -₱ 65,000.00
Income credited to Mr. T -₱ 95,000.00
Taxable Net Income ₱ 205,000.00

Income Tax Due TAX EXEMPT

Mr. R
Income given from Trust ₱ 65,000.00
Net Business Income ₱ 455,000.00
Gain from sale of asset ₱ 45,000.00
Taxable Net Income ₱ 565,000.00

Income Tax Due ₱ 71,250.00

Income Tax Credits ₱ 9,750.00
Income Tax Payable ₱ 61,500.00

Problem 14
Trust I
Gross Income ₱ 635,000.00
Allowed deduction -₱ 147,000.00
Income distributed to Mr. X -₱ 85,000.00
Income given to Mr. Z -₱ 25,000.00
Taxable Net Income ₱ 378,000.00

Income Tax Due ₱ 25,600.00

Income Tax Credits ₱ -
Income Tax Payable ₱ 25,600.00

Allocated Income Tax Due ₱ 59,149.30

Income Tax paid -₱ 25,600.00
Income Tax Payable ₱ 33,549.30
Problem 15
Trust I
Gross Income ₱ 720,000.00
Allowed Deduction -₱ 125,000.00
Income given to James -₱ 137,500.00
Income given to Carah -₱ 145,000.00
Taxable Net Income ₱ 312,500.00

Income Tax Due ₱ 12,500.00

Income Tax Credits ₱ -
Income Tax Due ₱ 12,500.00

Allocated Income Tax Due ₱ 44,147.06

-₱ 12,500.00
₱ 31,647.06
Son
₱ 64,000.00
₱ 900,000.00
₱ 35,000.00
₱ 600,000.00
₱ 399,000.00

₱ 29,800.00

Wife Combined
₱ 370,000.00
₱ 620,000.00
₱ 20,000.00
₱ 340,000.00
₱ 37,500.00
₱ 632,500.00 ₱ 1,435,000.00

₱ 88,125.00 ₱ 218,875.00

America
₱ 800,000.00
₱ 15,000.00
₱ 402,000.00
₱ 413,000.00
Mr. T
₱ 95,000.00
₱ 285,000.00
₱ 75,000.00
₱ 455,000.00

₱ 43,750.00
₱ 14,250.00
₱ 29,500.00

Trust II Consolidated Trust

₱ 495,000.00
-₱ 63,500.00
-₱ 46,000.00
-₱ 15,000.00
₱ 370,500.00 ₱ 748,500.00

₱ 24,100.00 ₱ 117,125.00
₱ - ₱ 49,700.00
₱ 24,100.00 ₱ 67,425.00

₱ 57,975.70 ₱ 117,125.00
-₱ 24,100.00 -₱ 49,700.00
₱ 33,875.70 ₱ 67,425.00
 Trust II Consolidated Trust
₱ 850,000.00
-₱ 245,000.00
-₱ 143,700.00
-₱ 130,000.00
₱ 331,300.00 ₱ 643,800.00

₱ 16,260.00 ₱ 90,950.00
₱ - ₱ 28,760.00
₱ 16,260.00 ₱ 62,190.00

₱ 46,802.94 ₱ 90,950.00
-₱ 16,260.00 -₱ 28,760.00
₱ 30,542.94 ₱ 62,190.00
 CHAPTER 4

Problem 1 Resident Citizen

BASIC INCOME TAX:

Gross Profit from sales in PH ₱ 580,000.00
Gross Profit from sales in abroad ₱ 680,000.00
Rental Income in PH ₱ 36,000.00
Interest Income in money market placement in abroad ₱ 5,600.00
Dividend Income from foreign corporation ₱ 24,000.00
Royalty income in foreign country ₱ 60,000.00
Interest Income in bank deposit abroad ₱ 15,000.00
Prizes abroad ₱ 18,000.00
Business expenses in PH -₱ 480,000.00
Business expenses abroad -₱ 530,000.00
Taxable Net Income ₱ 408,600.00

Income Tax Due ₱ 32,150.00

Non-Resident Citizen
BASIC INCOME TAX:
Gross Profit from sales in PH ₱ 580,000.00
Rental Income in PH ₱ 36,000.00
Business expenses in PH -₱ 480,000.00
Taxable Net Income ₱ 136,000.00

Income Tax Due EXEMPT

Problem 3
Resident Citizen
BASIC INCOME TAX: PH
Income from Employment ₱ 280,000.00
Interest Income on personal loans ₱ 6,000.00
Interest Income in bank deposits ₱ -
Interest Income in money market placements ₱ -
Dividend income from a foreign corporation ₱ 6,800.00
Royalty Income ₱ -
Prizes from sports contest ₱ -
Winnings
Share in the net income of ordinary partnership in PH
Share in the net income of general professional partnership ₱ 35,000.00
Prizes ₱ 5,600.00
Gross Profit from sales ₱ 850,000.00
Business expenses -₱ 610,000.00
Sale of capital asset from US
Taxable Net Income

Income Tax Due

Resident Alien
BASIC INCOME TAX: PH
Income from Employment ₱ 280,000.00
Interest Income on personal loans ₱ 6,000.00
Interest Income in bank deposits ₱ -
Interest Income in money market placements ₱ -
Dividend income from a foreign corporation ₱ 6,800.00
Royalty Income ₱ -
Prizes from sports contest ₱ -
Winnings
Share in the net income of ordinary partnership in PH
Share in the net income of general professional partnership ₱ 35,000.00
Prizes ₱ 5,600.00
Gross Profit from sales ₱ 850,000.00
Business expenses -₱ 610,000.00
Taxable Net Income ₱ 573,400.00

Income Tax Due ₱ 73,350.00

Problem 4
Resident Citizen
BASIC INCOME TAX
Compensation Income ₱ 275,000.00
Lease income from abroad ₱ 165,000.00
Interest Income from bank deposits abroad ₱ 4,500.00
Lotto draw winnings in US ₱ 750,000.00
Prizes abroad ₱ 750,000.00
Taxable Net Income ₱ 1,944,500.00

Income Tax Due ₱ 473,350.00

Resident Alien
BASIC INCOME TAX
Compensation Income ₱ 275,000.00

Income Tax Due ₱ 5,000.00

Problem 5
 Resident Citizen

Non-Resident Citizen

Resident Citizen
ABROAD
₱ 250,000.00
₱ 3,000.00
₱ 4,200.00
₱ 1,600.00
₱ 2,000.00
₱ 50,000.00
 ₱ 30,000.00
₱ 16,900.00
₱ 40,000.00
₱ 45,000.00
₱ 50,000.00
₱ 960,000.00
-₱ 630,000.00
₱ 760,000.00
₱ 2,156,100.00

₱ 539,952.00

Resident Alien

Resident Citizen
Resident Alien
FINAL INCOME TAX:
Dividend Income from domestic corporation ₱ 12,000.00
Royalty income on musical composition in PH ₱ 30,000.00
Interest income in bank deposit in PH ₱ 7,500.00
Interest income in trust fund in PH ₱ 21,000.00
Prizes in PH ₱ 14,000.00
Gain of shares of stock outside ₱ 125,000.00
Share in the net income of ordinary partnership ₱ 60,000.00
Total

FINAL INCOME TAX:

Dividend Income from domestic corporation ₱ 12,000.00
Royalty income on musical composition in PH ₱ 30,000.00
Interest income in bank deposit in PH ₱ 7,500.00
Interest income in trust fund in PH ₱ 21,000.00
Prizes in PH ₱ 14,000.00
Gain of shares of stock outside ₱ 125,000.00
Share in the net income of ordinary partnership ₱ 60,000.00

Total
FINAL INCOME TAX:

Interest Income in bank deposits in PH ₱ 10,800.00

Interest Income in money market placements in PH ₱ 7,500.00
Dividend income from a domestic corporation ₱ 5,700.00
Prizes from sports contest ₱ 80,000.00
Royalty income in PH ₱ 90,000.00

Winnings ₱ 45,000.00

Share in the net income of ordinary partnership in PH ₱ 60,000.00

Prizes from PCSO ₱ 150,000.00

FINAL INCOME TAX

Interest Income on bank deposits - PH ₱ 7,300.00
Interest Income on US Dollar bank deposits in PH on expanded FCDS ₱ 60,000.00
PCSO ₱ 250,000.00
Dividend income ₱ 3,750.00
Royalty income ₱ 45,000.00

Total Final Income Tax

FINAL INCOME TAX

Interest Income on bank deposits - PH ₱ 7,300.00
Interest Income on US Dollar bank deposits in PH on expanded FCDS ₱ 60,000.00
PCSO ₱ 250,000.00
Dividend income ₱ 3,750.00
Royalty income ₱ 45,000.00

Total Final Income Tax

Rate Final Income Tax
₱ 0.10 ₱ 1,200.00
₱ 0.10 ₱ 3,000.00
₱ 0.20 ₱ 1,500.00
₱ 0.20 ₱ 4,200.00
₱ 0.20 ₱ 2,800.00
₱ 0.15 ₱ 18,750.00
₱ 0.10 ₱ 6,000.00
₱ 37,450.00

Rate Final Income Tax

₱ 0.10 ₱ 1,200.00
₱ 0.10 ₱ 3,000.00
₱ 0.20 ₱ 1,500.00
₱ 0.20 ₱ 4,200.00
₱ 0.20 ₱ 2,800.00
₱ 0.15 ₱ 18,750.00
₱ 0.10 ₱ 6,000.00

₱ 37,450.00
₱ 0.20 ₱ 2,160.00
₱ 0.20 ₱ 1,500.00
₱ 0.10 ₱ 570.00
₱ 0.20 ₱ 16,000.00
₱ 0.20 ₱ 18,000.00

₱ 0.20 ₱ 9,000.00

₱ 0.10 ₱ 6,000.00
₱ 0.20 ₱ 30,000.00
₱ 83,230.00

₱ 0.20 ₱ 1,460.00
₱ 0.15 ₱ 9,000.00
₱ 0.20 ₱ 50,000.00
₱ 0.10 ₱ 375.00
₱ 0.20 ₱ 9,000.00

₱ 69,835.00

₱ 0.20 ₱ 1,460.00
₱ 0.15 ₱ 9,000.00
₱ 0.20 ₱ 50,000.00
₱ 0.10 ₱ 375.00
₱ 0.20 ₱ 9,000.00

₱ 69,835.00