TAX 1-2A Exercises on Corporation August 2010

1. Robyn Corporation, a resident foreign corporation, has the following income and expenses for the year
2009:
Gross Income, Philippines P 1,600,000
Gross Income, USA 400,000
Business Expenses, Philippines 500,000
Business Expenses, USA 200,000
Unallocated Business Expenses 150,000
Interest Expense, Philippines 100,000
Interest Expense, USA 50,000
Unallocated Interest Expenses 80,000
How much is the taxable net income?
SOLUTION:
Gross Income, Philippines P 1,600,000
Less: Business Expenses, Philippines P 500,000
Unallocated business expenses
(P1,600,000/P2,000,000 X P150,000) 120,000
Interest expense, Philippines 100,000
Unallocated interest expense
(P1,600,000/P2,000,000 X P80,000) 64,000 784,000
Net Income, Philippines P 816,000

2. Robyn Corporation, a domestic corporation, manufactures goods in the Philippines, which are sold
exclusively in foreign countries. The following data are taken from the records of the corporation for
the year 2009:
Gross Sales, Outside P 5,000,000
Gross Income from Sales, Outside 3,000,000
Operating Expenses 2,100,000
Value of Properties, Philippines 300,000
Value of Properties, Outside 600,000
How much is the taxable income from sources within and from sources outside?
SOLUTION:
Gross Income from Sales, Outside P 3,000,000
Less: Operating Expenses 2,100,000
Taxable Income P 900,000

Taxable Income in the Philippines

(P900,000/2 X P300,000/P900,000) P 150,000
Add: (P900,000/2 X P0/P5,000,000) 0
Taxable income in the Philippines P 135,000

Taxable Income outside the Philippines

(P900,000/2 X P600,000/P900,000) P 315,000
Add: (P900,000/2 X P5,000,000/P5,000,000) 450,000
Taxable income outside the Philippines P 715,000
3. Robyn Corporation, a domestic corporation, in operation for four years already, has the following data
for the year 2009:
Net sales P 2,000,000
Capital gain on direct sales at P500,000 to a buyer
of shares of domestic corporation 200,000
Capital gain or sale thru a real estate broker of
land and building outside the Philippines for P5 M 1,000,000
Dividend from domestic corporation 50,000
Interest on bank deposits 40,000
Cost of sales 600,000
Quarterly corporate income tax paid 190,000
Operating expenses 500,000
How much corporate income tax still due at the end of the year? How much is the total income tax due?