FEU-MAKATI-IABF

S U B J E C T: INCOME TAXATION 2
ND
SEMESTER 2012-2013
SAMPLE PROBLEMS

PART II-PROBLEM SOLVING
CHAPTER 11-TAXATION OF INDIVIDUALS
PROBLEM #1-SPECIAL TAXPAYERS
RGF, A FILIPINO , MARRIED WITH 3 QUALIFIED DEPENDENT CHILDREN, HOLDING A
MANAGERIAL POSITION IN A REGIONAL OPERATING HEADQUATERS OF A MULTINATIONAL
COMPANY RECEIVES THE FOLLOWING FOR THE YEAR 2011::
BASIC MONTHLY SALARY= P120,000
MONTHLY COST OF LIVING ALLOWANCE= 12,000
13
TH
MONTH PAY= 120,000
REQUIRED:
COMPUTE FOR THE INCOME TAX DUE UNDER THE FOLLOWING ASSUMPTIONS:
A HE OPTED TO BE TAXED AT 1!" FINAL TAX
B HE OPTED TO BE TAXED AT REGULAR TAX RATE
C BASED ON COMPUTATION FOR A AND B, DECIDE WHAT IS BETTER OPTION TO TA#E
SOLUTION:
ASSUMPTION A:
ANNUAL SALARY(P120,000 X 12 MOS! P1,""0,000
ANNUAL COLA(12,000 X 12 MOS! 1"",000
1#
TH
MONTH PAY 120,000
GROSS ANNUAL COMPENSARTION INCOME 1,$0",000(A!
X FT RATE 1%&
FT ON GROSS INCOME AT 1%& 2%%,'00
ASSUMPTION B:
GROSS ANNUAL COMPENSATION INCOME 1,$0",000(A!
LESS: NONTAXABLE 1#
TH
MONTH PAY #0,000
TAXABLE COMPENSATION INCOME
BEFORE PE 1,'$",000
LESS: PE-BASIC %0,000
ADD(L(2%,000 X #! $%,000 12%,000
NET TAXABLE INCOME 1,%")000
TAX ON P%00,000 P12%,000
TAX ON EXCESS(1,%")*-%00*! X #2& ##%,'+0
NORMAL INCOME TAX DUE "'0,'+0
C!CHOOSE OPTION A
PROBLEM #2-TAX CREDIT FOR TAXES PAID TO T,O OR MORE FOREIGN COUNTRIES
ASSUME THAT RICHARD PASCUAL, MARRIED WITH $ QUALIFIED DEPENDENT CHILDREN AND
A RESIDENT PHILIPPINE CITI%EN, DERIVED INCOME FROM SOURCES WITHIN AND WITHOUT
THE PHILIPPINES FOR YEAR 2011 AS FOLLOWS:
SOURCES OF INCOME TAXABLE INCOME INCOME TAX PAID
PHILIPPINES & P330,000 P22,!00
VIETNAM 300,000 10!,000
CAMBODIA '!0,000 2(2,!00
HONG#ONG )1*0,000 0
REQUIRED:
A COMPUTE FOR PHIL+ INCOME TAX BEFORE TAX CREDIT
B COMPUTE FOR ALLOWABLE TAX CREDIT FOREIGN )LOWER
C COMPUTE FOR PHIL+ INCOME TAX STILL DUE
SOLUTION:
A! PHIL INCOME TAX BEFORE TAX CREDIT
TAXABLE INCOME FROM ALL SOURCES:
PHILIPPINES P##0,000
VIETNAM #00,000
CAMBODIA $%0,000
HONG*ONG (1+0,000!
TAXABLE INCOME BEFORE EXEMPTION 1,200,000
LESS: PE-BASIC %0,000
ADD(L 100,000 1%0,000
TAXABLE INCOME 1,0%0,000
TAX ON P%00,000 P12%,000
TAX ON EXCESS(P1,0%0*-%00*! X #2& 1$',000
PHIL INCOME TAX BEFORE TAX CREDIT #01,000
B! ALLO,ABLE TAX CREDIT FOREIGN(LO,ER!
LIMIT 1: ACTUAL TAX PAID(P10%,000-2'2,%000. P#'$,%00
LIMIT 2: INDIVIDUAL TAXABLE INCOME-FOREIGN
VIETNAM(#00*/1,200* X #01*! $%,2%0
CAMBODIA($%0*/1,200* X #01*! 1++,12% 2'#,#$%
LIMIT #: TOTAL TAXABLE INCOME-FOREIGN
(#00*-$%0*-1+0*!/1,200,000 X #01,000 21+,22%(LO,ER!!
C! PHIL INCOME TAX STILL DUE
PHIL INCOME TAX BEFORE TAX CREDIT P#01,000
LESS: TAX CREDITS P21+,22%
LOCAL QTRLY INC TAX PD 22,%00 2"0,$2%
INCOME TAX STILL DUE AND PAYABLE '0,2$%
PROBLEM ##-TAXABILITY OF INDIVIDUAL RECEIVING COMPENSATION INCOME
MS+ M, SINGLE, WHO WAS HIRED IN MARCH 2011 RECEIVED THE FOLLOWING:
BASIC MONTHLY SALARY =P!0,000
13TH MONTH PAY =P!0,000
MONTHLY SALARY FROM
PREVIOUS EMPLOYER),AN+-FEB+ 2011 =P3!,000
SHE PAID FOR THE YEAR AN ANNUAL PREMIUM ON HEALTH AND HOSPITALI%ATION
INSURANCE AMOUNTING TO P!,200+
REQUIRED:
AGROSS COMPENSATION INCOME )SEPARATE NON-TAXABLE FROM TAXABLE
B+PERSONAL AND ADDITIONAL EXEMPTIONS
C+ ALLOWABLE DEDUCTION )HEALTH INSURANCE PREMIUM
D+ NET TAXABLE COMPENSATION INCOME
E+ INCOME TAX DUE
SOLUTION:
NATURE TOTAL NON-TAXABLE TAXABLE
SALARY:
CURRENT.P%0* X 10 %00,000 %00,000
PREV.P#%* X 2 $0,000 $0,000
1#TH MP %0,000 #0,000 20,000
#0,000 %)0,000 (A!
LESS: PE -%0,000 (B!
H-I-P 0 (C!
%"0,000 (D!
ITD.FA. P12%,000
-#2& X "0,000 12,+00
1#$,+00 (E!
PROBLEM #"-TAXABILITY OF INDIVIDUAL EARMING PROFESSIONAL/ BUSINESS INCOME
MR+ N+, A CERTIFIED PUBLIC ACCOUNTANT, HAS THE FOLLOWING INCOME AND EXPENSES
FOR THE YEAR 2011
PROFESSIONAL FEES)NET OF WITHHOLDING TAX OF 10" P!'(,000
RENT INCOME )NET OF WITHHOLDING TAX OF !" P30$,000
EXPENSES:
SALARIES TO STAFF 1(0,000
POWER AND WATER 20,000
GROCERIES FOR FAMILY USE (0,000
OFFICE SUPPLIES *,000
OFFICE TELEPHONE 30,000
VALENTINE GIFT TO GIRLFRIEND $0,000
REQUIRED:

A+ GROSS INCOME.RECEIPTS
B+ EXPENSES
C+ TAXABLE INCOME
D+ INCOME TAX DUE
E+ NET INCOME TAX PAYABLE
SOLUTION:
NET OF GROSS
NATURE ,HT ,HT INCOME/RECEIPTS
PROF FEES '",000 %$',000 '"0,000 .%$'*/)
RENTAL INCOME 1',000 #0",000 #20,000 .#0"*/)%
+0,000 )'0,000 (A!
LESS: EXPENSES
SALARIES 1'0,000
PO,ER AND H20 20,000
OFC SUPPLIES +,000
OFC TEL #0,000 21+,000 (B!
$"2,000
LESS: PE -%0,000
')2,000 (C!
INCOME TAX DUE:
FA. P12%,000
- #2& X 1)2,000 '1,""0
1+',""0 (D!
LESS: ,HT -+0,000
NET INCOME TAX PAYABLE 10',""0 (E!
CHAPTER 12-TAXATION OF CORPORATION
PROBLEM #$-TAXABILITY OF CLASSES OF CORPORATIONS
MAPAGBIGAY CORP+, HAS THE FOLLOWING INCOME AND DEDUCTIONS FOR 2011
GROSS DEDUCTIONS
INCOME
FROM PHIL+ SOURCES P1,200,000 P$*0,000
FROM FOREIGN COURCES:
SINGAPORE P(00,000 P300,000
MALAYSIA P3(0,000 P120,000
THAILAND P300,000 P1!0,000
REQUIRED: COMPUTE FOR INCOME TAX UNDER THE FOLLO,ING ASSUMPTIONS:
/ MAPAGBIGAY CORP+ IS A DOMESTIC CORPORATION
0 MAPAGBIGAY CORP+ IS A RESIDENT FOREIGN CORPORATION
1 MAPAGBIGAY CORP+ IS A NON-RESIDENT FOREIGN CORPORATION
SOLUTION:
DC RFC NRFC
GROSS INCOME 2,"'0* 1,200* 1,200*
LESS: DEDUCTIONS 1,0%0* "+0* 0
TAXABLE INCOME 1,"10* $20* 1,200*
TAX RATE #0& #0& #0&
INCOME TAX "2#* 21'* #'0*
0000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000
TAX TABLE FOR INDIVIDUAL TAXPAYERS:
TAXABLE INCOME TAX RATE
NOT OVER P10,000 %&
OVER P10,000 BUT NOT OVER P#0,000 P%00 - 10& OF THE EXCESS OVER P10,000
OVER P#0,000 BUT NOT OVER P$0,000 P2,%00 - 1%& OF THE EXCESS OVER P30,000
OVER P$0,000 BUT NOT OVER P1"0,000 P+,%00 - 20& OF THE EXCESS OVER P'0,000
OVER P1"0,000 BUT NOT OVER P2%0,000 P22,%00 - 2%& OF THE EXCESS OVER P1$0,000
OVER P2%0,000 BUT NOT OVER P%00,000 P%0,000 - #0& OF THE EXCESS OVER P2!0,000

OVER P%00,000 P12%,000 - #2& OF THE EXCESS OVER P!00,000
IN 2000 AND ONWARDS
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