Income taxation by ampongan chapter 5 to 7

EXERCISES 5-1 None The entire income is exempt because Minnie is a MWE Basic salary P 48,000 Overtime and night-shift differential pay 14,000 Hazard pay 12,000 Other benefits: 13th month pay P 4,000 Less: Exemption 30,000 - Total (not taxable) 74,000 a None Proceeds of life insurance policy payable upon the death of the insured are excluded from gross income b Fernando must report P20,000 [(P12,000 x 10) – 100,000] as income The rule is "amounts received in excess of the face amount of the policy are usually taxable as interest;” hence, included in the gross income c No It does not matter whether the insured is the mother or the wife of the beneficiary The exclusion exists because life insurance benefits closely resemble inheritances which are not taxable None, because Angel is not required to pay income tax on the entire amount he received as proceeds from insurance policy The reason being that the insured did not outlive the policy If however, his father outlived the life insurance policy, Angel must report an income of P75,000 (the face amount of P100,000 minus the premiums paid in the amount of P25,000) Rodolfo must report an income of P75,000 Although acquired by him, he is not required to report the value of the inherited properties in his income tax return because properties acquired thru inheritance are subject to estate tax; the liability being on the estate and not on the recipient of the estate a The P20,000 given to cover medical expenses are actual damages, while the other P20,000 constitutes moral damages Both actual and moral damages are not subject to tax b The P150,000 awarded by the court for winning in the libel case is not taxable Libel is included in the phrase "personal injury or sickness," which is exempt from income tax c Not included in the gross income The amount of P12,000 being given by the employer to its employees in case of disability are not salaries but compensation for personal injuries being suffered by its employees Taxable Salaries received by employees who are unable to work due to personal injuries or sickness are taxable It does not make any difference between receiving the salary while he is working and receiving the same even while the employee is unable to work d Not taxable The P60,000 is in the form of moral damages which is not capable of pecuniary estimation Besides, it is in the nature of a return of capital e 6 No, because all the requisites for exemption from income tax are present: (1) Tanda retired at age 60 which is more than the required age of 50 years; (2) a private pension plan is maintained by the employer; and, (3) he worked with San Jose Corporation for more than 10 years The law does not require continuous service Therefore, the 10-year service requirement is satisfied even if he had a broken service with the company The amount is taxable to Nilo Separation pay is exempt from income tax if the cause of separation from service is death, sickness, physical disability, or any cause beyond the control of the employee None of the above-mentioned can be pointed out as the very cause of his separation from service Inefficiency in service due to frequent tardiness caused by heavy traffic is not beyond the control of the employee Taxable a b Taxable c Not taxable Kay was awarded without joining the contest and not required to render substantial future services Moreover, the prize given was in recognition of an educational attainment The prize won by Tornado is taxable The fight was not sanctioned by a national sports associations As a matter of fact, it was held in a very secluded place The main purpose of the fight is for the gamblers to bet on their favorite fighter and not to promote sports 10 Answer: P38,000 Salary (P20,000 x 12) Add: Benefits Christmas bonus Productivity bonus 240,0 00 20,000 2,000 Loyalty award Cash gift Anniversary bonus 13th month pay Total Less: Exemption 3,000 1,000 2,000 20,000 48,000 30,000 Income subject to tax 18,0 00 258,0 00 EXERCISES 5–2.1: ANSWER: D The entire amount of proceeds of the insurance policy received by the beneficiary of Okeze from Filipinas Life Assurance Company is not taxable because they are more considered as indemnity rather than as gain or profit ANSWER: B Proceeds of life insurance Less: Premiums paid (1,000 x 12 x 20) Subject to tax ANSWER: C Total amounts received (50,000 x 12) Less: Face value of the policy Deemed interest (taxable) ANSWER: C Total amounts received (50,000 x 12) Less: Amount of premiums paid (1,000 x 12 x 20) Subject to tax Prob 5-2.2 ANSWER: C 500,00 240,00 260,00 600,00 500,00 100,00 600,00 240,00 360,00 Proceeds of insurance Less: Premiums paid (P10,000 x 20) Income subject to tax 500,0 00 200,00 300,00 ANSWER: D None because Sonia died Prob 5-2.3 ANSWER: D Income from coconut land 50,0 00 30,000 80,000 Income from bus operation Income subject to tax Prob 5-2.4: ANSWER: B Proceeds of life insurance policy Less: Amounts of premiums paid Amount subject to tax P 500,00 400,00 100,00 Prob 5-2.5: ANSWER: C Proceeds of insurance policy Less: Amount paid upon assignment Premiums subsequently paid Taxable income P 200,00 P 60,000 80,000 140,00 60,00 Prob 5-3.1 ANSWER: C Applying the principle of “beyond the control test,” the separation from employment of Mr Jacobo was due to a cause which is within his control, that is resignation; while the cessation from employment of Mr Kintanar was made without his control Therefore, the separation pay received by Mr Jacobo is a taxable income while the amount received by Mr Kintanar is not taxable Prob 5-3.2 ANSWER: C The retirement benefit of P300,000 is taxable to Jovito because he retired at the age of 48 To be exempt from the payment of income tax, the taxpayer must be at least 50 years on the date of his retirement In the case of the proceeds from insurance policy, the amount exempt is P40,000 (P2,000 x 20) only which represents the return of the premiums paid Prob 5-3.3 ANSWER: B There is no showing that Mario was in the service of the same employer for at least ten (10) years, that he is at least fifty(50) years of age at the time of retirement, that he has never availed of the benefit of exclusion, and that the retirement gratuity came from a reasonable retirement plan maintained by his employer The amount of P250,000 is taxable because Remus is only 49 years old upon retirement To be exempt from income tax, the retirement age of an employee must be at least 50 years Prob 5-3.4 ANSWER: D The money value of the accumulated leave credits given to a retiring government official or employee is not subject to tax (CIR s CA, et.al, 203 SCRA 72) Prob 5-3.5 ANSWER: A The P1,000,000 is part of Larry's retirement pay and not a gift Considering that the requisites for exemption from payment of tax are satisfied, the additional P1,000,000 is not taxable Prob 5-3.6 ANSWER: D The separation pay received by Evelyn is taxable because of the voluntary action on her part To be exempt, the causes for separation must be either death, sickness, physical disability, or any cause beyond the control of the employee The separation pay received by Ling-ling and Gina are exempt because they are separated from service due to redundancy and disability, causes which are beyond their control EXERCISES 5–4 Prob 5–4.1 ANSWER: C Only the amount of P300,000 corresponding to the income which was lost during the period of treatment is taxable because even if he did not meet an accident, that income would have been taxable Prob 5-4.2 ANSWER: A Two months' salary Increase in value of car (P600,000 450,000) Income 40,0 00 150,00 190,00 Prob 5-4.3 ANSWER: C Payment for the salaries 60,0 00 Prob 5-4.4 ANSWER: D The amount of P500,000 should not be declared in the income tax returns of the heirs The amount represents damages received on account of personal injuries (which includes death), therefore excludible from gross income [Sec 32 (B) {1}, TRA) The reason is that life insurance proceeds represents indemnity and not income The proceeds of life insurance policies paid to the beneficiary, in this case the wife, upon the death of the insured is excluded from gross income EXERCISES 5–5 EXERCISE 5– 5.1: ANSWER: C Talent fee Professional fee Total amount taxable Cash prize Pay per view Talent fee Taxable amount 400,000 1,000,000 1,400,000 25,000,00 30,000,00 12,000,00 67,000,00 EXERCISES 55.2 a The P350,000 value of the car is subject to a final tax of 20% b The P5,000 is subject to graduated tax to be reported in the income tax c return The cash prize and the equivalent amount of the 100 shares are subject to 20% final tax because the awards given are not in recognition of religious, charitable, scientific, educational, artistic, literary or civic achievement EXERCISES 5-5.3 Being a resident citizen, Monique Salonga is taxable on income within and without the Philippines Consequently: a The income of $75,000 is taxable to her unless she has acquired the status of a contract worker In which case, the $75,000 is not taxable to her because contract workers are taxable only on income derived from sources within the Philippines; b The talent fees derived from Inter-Island Broadcasting Network amounting to P100,000 is a professional income subject to graduated rates of tax c The $5,000 value of the trophy is not taxable to her because it is in recognition of an outstanding achievement An award for outstanding achievement is a gift, and not a taxable income PROBLEM 5-6.1 ANSWER: D Salary (P25,000 x 12) 300,0 00 Other benefits: 13th month pay 25,00 2,500 30,000 57,500 30,000 Cash gift Longevity pay Total Less: Amount of exemption Proceeds of life insurance (300,000 – 200,000) Income subject to tax 27,5 00 100,00 427,50 EXERCISE – None Holiday pay, overtime pay, night shift differential pay and hazard pay earned by a minimum wage earner shall likewise be exempt from income tax Basic salary Commissions Honoraria Holiday pay Overtime pay Hazard pay Other benefits (36,000 30,000) Income subject to tax 95,000 – 15,000 10,000 7,000 8,500 6,000 6,00 147,50 EXERCISES – ANSWER: D Only option D has complied with the requisites for exemption from tax of retirement benefits, viz: (1) There must be a private pension maintained by the employer and approved by the BIR; (2) The retiring official or employee has been in the service of the same employer for at least ten (10) years; (3) The age must be at least 50 years old at the time of retirement; and (4) The benefit of exemption can be availed of only once ANSWER: C A monthly gratuity of P20,000 to a Medal of Valor awardee is exempt from income tax (RA 9049) Terminal leave pay of employees of the government are exempt from tax (CIR v Castañeda, GR 96016, Oct 17, 1991) Retirement per Collective Bargaining Agreement is considered voluntary, hence subject to income tax and withholding tax on wages (BIR Ruling No 071-98) Separation benefits consisting of the market value/zonal value of the residential lot, is tax exempt (BIR Ruling No 056-95) ANSWER: C Letter A refers to “deductions from gross income.” Letter B refers to “tax exemption.” Letter D refers to “tax credit.” Exclusion refers to income received or earned but is not taxable as income because exempted by law or treaty Such tax free income are not to be included in the income tax return unless information regarding it is specifically called for (Sec 61, Regs.) ANSWER: A This is a case of key insurance where the company insures the life of its key employee The proceeds is not taxable to the corporation because it is considered as an indemnification for the loss of the president which is one of the company's key employees ANSWER: A The P3,500,000 is exempt from income tax because it is given as indemnification for the loss on the destruction of the company building ANSWER: B The proceeds of life insurance should be declared for estate tax purposes if the designation of the beneficiary was revocable ANSWER: C The provision exempting "interest on government securities" has been deleted in the Tax Reform Act Therefore, interest on government securities are now subject to tax ANSWER: D The pension from GSIS is not taxable while the interest from the time deposit is subject to a final tax of 20% No, the separation due to the economic condition is one which is beyond the employee’s control, hence, excluded from gross income and not subject to withholding tax ANSWER: A The phrase "personal injuries" which are exempt from income tax includes moral damages awarded by the court on account of mental anguish experienced by one person due to libelous statements made against him 10 ANSWER: C Prizes amounting to P10,000 or less are to be included in the computation of gross income They are not subject to final tax 11 ANSWER: C The amount of P1,500 given by his mother to Luis is in the form of a condonation or gift and not a taxable income 12 ANSWER: D Dismissal from employer due to inefficiency in service is a cause which is not beyond the control of the employee Under the “beyond the control test,” whenever an employee is separated from service for a cause or causes which is/are beyond his control, the separation pay received by him is not subject to tax 13 ANSWER: D Damages received by a taxpayer due to physical injuries or sickness are not taxable to him However, damages received as compensation for lost profits are subject to tax 14 ANSWER: D Thirteenth month pay and other benefits are exempt from income tax However, the amount in excess of P30,000 are taxable to the employee Deferred charges – MCIT Income tax payable d To record payment of income tax due for 2007 Income tax payable 15,000 15,000 100,00 Cash in bank 100,00 2008 The corporation is not allowed to carry forward and credit the 2006 and 2007 excess MCIT against the normal income tax liability for 2008 and 2009 since the 2008 and 2009 MCIT are greater than the Normal Income Tax for said year The accounting entries in 2008 and 2009 shall be similar to 2006 and 2007 above For taxable year 2010 when the expired portion of excess MCIT (65,000 – 50,000) for taxable year 2006 is closed to Retained Earnings account due to its non-application the entry is: Retained earnings Deferred charges – MCIT 10 Tuition fees School canteen Dormitories Bookstores Car stickers Total 11 15,000 15,000 1,560,0 00 250,000 95,000 48,000 8,30 1,961,3 00 If Fatima University is a non-stock, non-profit educational institution no income shall be reported for income tax purposes because nonstock non-profit schools are not subject to income tax If Fatima University is a government educational institution it will not report any income for income tax purposes because government educational institutions are exempt from income tax a Gross receipts Less: Cost of sales 4,500,0 00 1,200,0 00 3,300,0 00 680,0 00 2,620,0 00 35 % 917,0 00 Gross income Less: Deductions Taxable income Rate Income tax b Taxable income 2,620,0 00 75,000 42,00 2,737,0 00 Yield from deposit substitutes Interest income Total Less: Dividends paid Income tax paid Tax on deposit substitutes (75,000 x 20%) Tax on interest (42,000 x 20%) Reserved for building construction Improperly accumulated earnings 12 8,400 1,500,0 00 2,815,4 00 ( 78,4 00) The final withholding tax to be paid by the corporation (whether domestic, resident foreign or nonresident foreign) is uniformly computed as follows Gross selling price (P110 x 1,000) Less: Cost (P100 x 1,000) Net capital gain Rate of tax Capital gains tax (final tax) EXERCISES 7–2 7–2.1 375,000 917,000 15,000 ANSWER: A P 110,000 100,000 10,000 5% 500 ANSWER: C Answer: D For purposes of MCIT, the taxable year in which business operations commenced shall be the year in which the domestic corporation is registered with the Bureau of Internal Revenue Firms registered with BIR in any year shall be covered by MCIT after the lapse of three calendar years The corporation is registered with BIR in 2004 Therefore, it shall be subject to MCIT effective 2008 ANSWER: D Gross income Less: Deductions Taxable income Rate of tax Normal income tax MCIT (P852,000 x 2%) Income tax payable (higher) Answer: C Gross income Less: Deductions Taxable income Rate of tax Normal income tax MCIT (P632,000 x 2%) Income tax payable (higher) 852, 000 800,00 52,000 30 % 15,600 17,040 17,040 632,00 610,00 22,000 35 % 7,70 12,640 12,640 PROBLEM 7-2.2 ANSWER: C Minimum Corporate Income Tax Less: Normal income tax Excess of MCIT over NIT 50,000 20,000 30,000 Entry: Deferred charges - MCIT Income tax payable 30,000 ANSWER: A Retained earnings Deferred charges - MCIT 30,000 ANSWER: B 2005 2006 2007 Total excess of MCIT over NIT Journal entry: Income tax payable Deferred charges – MCIT 30,000 30,000 27,000 5,000 10,000 42,000 42,000 42,000 PROBLEM 7-2.3: ANSWER: B Income tax, 1st Qtr (NIT – higher) Less: Taxes withheld – Prior year Taxes withheld – 1st qtr Excess MCIT prior year Income tax due, 1st Qtr (normal income tax) 100,00 10,000 20,000 30,000 60,000 40,000 ANSWER: B Income tax, 2nd Qtr (MCIT – higher) Less: Taxes withheld – Prior year Taxes withheld – 1st qtr Taxes withheld – 2nd qtr Net income tax payment – 1st Qtr Income tax due, 2nd Qtr – MCIT 330,00 10,000 20,000 30,000 40,000 100,00 230,00 ANSWER: C Income tax, 3rd Qtr (NIT – higher) Less: Taxes Taxes Taxes Taxes withheld withheld withheld withheld – Prior year – 1st qtr – 2nd qtr – 3rd qtr 470,00 10,000 20,000 30,000 40,000 Net income tax payment – 1st 40,000 Qtr MCIT paid in the 2nd Qtr Excess MCIT in prior year 230,000 30,000 Income tax due, 3rd Qtr - NIT ANSWER: C Annual income tax (NIT – higher) Less: Taxes withheld – Prior year Taxes withheld – 1st qtr Taxes withheld – 2nd qtr Taxes withheld – 3rd qtr Taxes withheld – 4th qtr Net income tax payment – 1st Qtr Net income tax payment – 3rd Qtr MCIT paid in the 2nd Qtr Excess MCIT in prior year 670,00 10,000 20,000 30,000 40,000 35,000 40,000 70,000 230,000 30,000 Income tax due, Final Qtr - NIT ANSWER: A Annual income tax (MCIT – higher) Less: Taxes withheld – Prior year Taxes withheld – 1st qtr Taxes withheld – 2nd qtr Taxes withheld – 3rd qtr Taxes withheld – 4th qtr Net income tax payment – 1st Qtr Net income tax payment – 3rd Qtr MCIT paid in the 2nd Qtr Income tax due, Final Qtr - NIT EXERCISE 7–3 ANSWER: A 400,00 70,00 505,00 165,0 00 550,00 10,000 20,000 30,000 40,000 35,000 40,000 70,000 230,000 475,00 75,0 00 Gross income Less: Deductions Expenses NOLCO 2,950,0 00 1,750,0 00 300,00 Taxable income Rate of tax Income tax due ANSWER: D Taxable income Add: Interest on bank deposit (16,000/80%) Proceeds of insurance NOLCO Dividends from ABB 900,000 20,000 1,200,0 00 300,00 75,00 Total Less: Dividends paid Income tax paid Interest on bank deposit (20,000 –16,000) Improperly accumulated taxable income Rate Improperly accumulated earnings tax 2,050,0 00 900,000 35 % 315,00 500,000 315,000 4,000 1,595,0 00 2,495,0 00 819,00 1,676,0 00 10 % 167,60 ANSWER: D ANSWER: D ANSWER: C PROBLEM 4.1 ANSWER: 7C Gross income 11,230,0 00 Less: Expenses Salary, allowances and bonus 6,400,000 Other operating expenses 2,600,000 Depreciation of additional school facilities: Classrooms (1,300,000/20 x 48,750 9/12) Furniture & equipment 10,0 (400,000/20 x 6/12) 00 Taxable income Rate of tax Income tax ANSWER: D Tuition fees 9,500,00 1,200,00 350,000 180,00 11,230,0 00 Miscellaneous fees Income of bookstore Income of school canteen Gross income Less: Expenses Salary, allowances and bonus Other operating expenses Construction of additional classrooms Furniture and equipment Taxable income Rate of tax Income tax 9,058,75 2,171,25 10% 217,12 6,400,000 2,600,000 1,300,000 400,000 10,700,0 00 530,000 10 % 53,00 ANSWER: B A public elementary school is also a government educational institution They are exempt from income tax under Sec 30 of the National Internal Revenue Code A non-stock, non-profit educational institution is exempt from tax under Article XIV, Sec 4[3], [4] of the Constitution A non-profit educational institution is subject to an income tax rate of 10% ANSWER: D PROBLEM 7–4.2 ANSWER: A Gross income Less: Deductions Operating expenses Cost of building 10,000,0 00 6,400,0 00 2,500,0 00 Taxable income Rate of tax Income tax due ANSWER: C Gross income Less: Deductions Operating expenses Depreciation(2,500,000/50x6/ 12) Taxable income Rate of tax Income tax due 8,900,00 1,100,00 10% 110,00 10,000,0 00 6,400,0 00 25,00 6,425,00 3,575,00 10% 357,50 ANSWER: B The importation of laboratory equipments are exempt from customs duties if the school is a private educational institutions The school building, even if rented only by the school, if being used actually, directly and exclusively for educational purpose is exempt from real property tax The portion of the school building is subject to real estate tax because it is not being used actually, directly and exclusively for educational purpose The income from operation is taxable Only income received by non- stock non-profit educational institutions and government educational institutions are exempt ANSWER: C EXERCISES – PROBLEM 7–5.1 ANSWER: A Gross income, Philippines Less: Expenses, Philippines Gross income, U.S.A Less: Expenses, USA Royalties, USA Taxable income Rate of tax (2008) Income tax 690,00 450,00 P 315,00 240,00 50,00 605,00 35% 211,75 ANSWER: C Gross income, Phils Less: Expenses Taxable income Rate of tax (2008) Income tax P 740,00 425,00 740,00 425,00 315,00 35% 110,25 ANSWER: A Gross income, Philippines Interest on bank deposit, PNB Total Rate of tax (2008) 740,00 10,00 750,00 35% Final tax 262,50 ANSWER: A PROBLEM 7– 5.2 ANSWER: D Gross income, Phils Less: Deductions Gross income, USA Less: Deductions 200,00 80,000 60,00 30,000 Taxable income Rate (2009) Income tax PROBLEM 7– 5.3 ANSWER: 120,00 30,00 150,00 30% 45,000 C Gross income, Philippines 2,800,0 00 1,300,0 00 1,500,0 00 35 % 525,0 00 Less: Deductions Taxable income Rate of tax (2008) Income tax PROBLEM 7– 5.4 ANSWER: B Gross income, Philippines Less: Expenses, Phils Gross income, U.S ($125,000 x P40) P5,000,000 Less: Expenses, U.S ($62,000 x P40) 2,480,000 1,200,000 800,000 2,520,0 400,00 00 Gross income, HK ($345,000/5x40) 2,760,000 Less: Expenses, HK ($230,000/5 x 40) 1,840,000 Taxable income Rate of tax Income tax Less: Expenses, Philippines Taxable income Rate of tax Income tax Rate of tax Final tax 1,200,0 00 30 % 360,00 ANSWER: A Gross income Rate of tax Income tax 1,200,0 00 800,00 400,000 30% 120,000 ANSWER: D Gross income, Philippines 3,440,0 00 3,840,0 00 30 % 1,152,0 00 ANSWER: C Gross income, Philippines 920,00 1,200,0 00 2.5 % 30,00 ANSWER: B Gross income, Philippines Less: Expenses, Philippines Taxable income Rate of tax 1,200,0 00 800,00 400,000 30 % 120,00 Income tax Amount remitted to mother company (400,000 - 120,000) Rate of tax Branch profit remittance tax 280,000 15% 42,000 ANSWER: A Exempt from branch profit remittance tax ANSWER: B Gross income Rate of tax Final tax 1,200,0 00 25 % 300,00 ANSWER: B Gross income Rate of tax Final tax 1,200,0 00 4.5 % 54,00 EXERCISE – ANSWER: A ANSWER: C ANSWER: B Net income after tax Rate of tax Branch profit remittance tax ANSWER: C Net income after tax Royalty 40,000,0 00 15% 6,000,00 40,000,0 00 3,500,00 Dividend Total Less: Branch profit remittance tax Amount to be remitted to head office ANSWER: B ANSWER: D 4,000,0 00 47,500,0 00 6,000,0 00 41,500,0 00 GSIS, SSS, and PHIC are exempt from income tax PAGCOR is now subject to income tax per RA 9727 ANSWER: C ANSWER: C All assets of a non-stock non-profit educational institution are exempt from customs duties on importation EXERCISE 7–7 MULTIPLE CHOICE THEORY ANSWER: B Cuentas en participacion is considered as a corporation subject to corporate tax General professional partnerships and co-ownerships are not subject to income tax A joint venture which is formed for the purpose of undertaking energy operations with the government are exempt from tax ANSWER: A An individual permanently residing in the Philippines is classified as resident regardless of whether he is a citizen or not ANSWER: D Domestic corporations and resident foreign corporations are taxed based on taxable income Non-profit cemeteries are exempt from income tax Nonresident foreign corporations are not allowed to claim deductions for purposes of income taxation They are taxed based entirely on gross income derived from sources within the Philippines ANSWER: B ANSWER: D ANSWER: D Dividends received by individuals from a domestic company are subject to final tax of 10% The rule on tax sparing credit applies only when the dividends are received by nonresident foreign from a domestic corporations ANSWER: B Sales (2,968,000 /112%) P2,650, 000 1,725,0 00 925,000 Less: Cost of sales Gross income Less: Expenses Inclusive (386,400 / 112%) Exclusive Taxable income Rate of tax (2008) Income tax 345,000 450,000 795,000 130,000 35% 45,500 EXERCISE 7–8 CASE PROBLEM Excess income taxes paid in a year that could not be applied as tax credit to taxes due the following year may be refunded the next year Thus, if the excess income taxes paid in 2005 have not been entirely used by a taxable corporation against its quarterly income tax liabilities for 2006, the unused amount of the excess may still be refunded, provided that the claim for such a refund is made within two years after payment of the tax If a taxpayer suffered a net loss in 2006, incurring no tax liability to which a previous year’s tax credit could be applied, there is no reason for the BIR to withhold a tax refund which rightfully belongs to the taxpayer Technicalities and legalisms, however exalted, should not be misused by the government to keep money not belonging to it, thereby enriching itself at the expense of its law-abiding citizens (solutio indebiti) Thus: Excess tax (TY ‘04, filed 4/15/05) 13,929,793 51 TY 2005 (filed 2006): Income tax due Less: Tax credit (excess tax ’05) Balance (may be refunded) 4,187,523.0 13,929,793 51 9,742,270.5 1* * Claim for refund should be made not later that April 15, 2007 ... Additional ( 25, 000 x 3) 1 57 , 75 6 50 ,000 75 , 000 Taxable income Tax on P 30,000 2, 75 6 x 15% Income tax due 1 25, 00 32, 75 6 2 ,50 0.00 413.40 2,913.40 ANSWER: C Compensation income Add: Professional income. .. income 1 25, 0 00 50 ,00 75 , 00 11 a Tax on P 70 ,000 5, 000 x 20% Income tax due Less: Withholding tax Income tax payable 8 ,50 0 1,000 9 ,50 0 15, 000 ( 5, 500) Income tax – Juan Income tax – Maria Income. .. Pat 50 0,0 00 2 75 , 0 00 2 25, 0 00 50 ,00 1 75 , 0 00 Less: Expenses Net income Less: Personal exemptions Taxable income Tax on P 140,000 35, 000 x 25% Income tax due Income tax – Jim 22 ,50 0 8, 75 0 31, 250