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BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS

Chapter 1: INTRODUCTION TO INTERNAL REVENUE TAXES

CHAPTER 1

INTRO. TO INTERNAL REVENUE TAXES


Problem 1-1 1. True as to the object of tax 2. True as a general rule, except if the merchandise is sold outside the Philippines not subject to business tax in the Philippines. If the resident Filipino citizen is within the subsistence livelihood earnings, tax-exempt. 3. False business tax is another Internal Revenue Tax distinct from income tax. 4. True 5. False it is the other way around. 6. True 7. True 8. True 9. True 10. False citizens, resident or nonresident are subject to transfer tax for transfers within.. 11. False on the 20th of the month following the taxable month. 12. True 13. False only income earned within will be taxable against resident alien 14. False should be at least P1,000,000 per year. Problem 1-2 1. A 2. A 3. C 4. B 5. A 6. B 7. A 8. D 9. C 10. A 11. D 12. A 13. C Problem 14 Problem 1-3 1. D 2. A 3. C 4. A 5. C 6. A 7. D 8. A 9. C 10. C 11. D 12. D 13. A

1. A

Subject to business tax is P6,000,000. Only sales within are subject to business tax. Subject to income tax: Total sales (P6,000,000 + P4,000,000) Total cost of sales (P2,000,000 + P1,500,000) Gross income Subject to transfer tax (P3,000,000 + P2,000,000) P10,000,000 ( 3,500,000) P 6,500,000 P 5,000,000

Since the donor is a citizen, all of his properties donated within and without is subject to donors tax.

2. B

BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS
Subject to business tax is P6,000,000. Only sales within are subject to business tax.

Chapter 1: INTRODUCTION TO INTERNAL REVENUE TAXES

Subject to income tax: Sales within Cost of sales within Gross income Subject to transfer tax (P3,000,000 + P2,000,000)

P6,000,000 (2,000,000) P4,000,000 P5,000,000

Since the donor is a citizen, all of his properties donated within and without is subject to donors tax. Problem 15 1. B 2. O 3. O 4. O 5. O Problem 16 Within Sales Gross income 1. 3,000,000 600,000 Without 2,000,000 400,000 Res. Citizen 3,000,000 1,000,000 Taxable Amount Res. Alien 3,000,000 600,000 Non-Res. Alien 3,000,000 600,000 6. B 7. B 8. O 9. T 10. T

Taxpayer is a resident citizen a. P1,000,000 = [P5,000,000 (P5,000,000/1.25)] b. P3,000,000 2. a. b. Taxpayer is a resident alien P600,000 = [P3,000,000 (P3,000,000/1.25)] P3,000,000

3.

Taxpayer is nonresident alien a. P600,000 = [P3,000,000 (P3,000,000/1.25)] b. P3,000,000

Problem 17 1. 2. P720,000 = (P600,000 x 1.2)

P180,000 = (P720,000 P600,000) + (P660,000 P600,000)

Problem 18 1. Tax returns: a. BIR Form 2551 for business tax b. BIR Form 1701Q for quarterly income tax return c. BIR Form 1701 for annual income tax return 2. b. Dates of filing and payments: April 15, August 15, and November 15 for the first 3 quarters and April 15 of the following year for the annual tax return

a. On or before the 20th of each month (BIR Form 2551)