Rich Kids
A left an estate composing a land used as a parking lot. Total gross rental is P1M and total allowable deduction is P200K.
How much is the income tax of the estate?
taxable income = P1M - P200K = P800K
income tax =P102,500 (P800K-P800K)*25% + P102,500
ABC Company is engaged in manufacturing and earned the following:
a. sale of manufactured screws and bolts - P3,500,000
b. sale of scrap metals from defective screws and bolts - P200,000
c. interest from banks - P75,000
d. rent income from leasing its warehouse net of withholding - P95,000
How much is the taxable operating income?
3,500,000 + 200,000 + 100,000 = 3,800,000
A&B Partnership incurred the following:
a. gross income of partnership amounting to P2M
b. allowable deductions of partnership amounting to P800,000
c. total assets of partnership of P50M
d. advance drawings of Partner A of P150,000
e. gross income of Partners A and B are P200,000 and P300,000 respectively
d. allowable deductions of Partners A and B are P50,000 and P70,000 respectively
Assume sharing of Partners A and B is 60:40, how much is the taxable income of Partner A in a GPP?
distributable share = P2M - P800K = P1.2M
share of Partner A = P1.2M x 60% = P720K
taxable income = P200K - P50K + P720K = P870K
B is the beneficiary of the estate with the following transactions:
a. Gross income of B amounting to P500,000
b. Allowable deductions of B amounting to P100,000
c. Dividend income from foreign company amounting to P15,000
d. Dividend income of domestic corporation amounting to P20,000
How much is the income tax of B?
Taxable income = P500K-P100K+P15K = P415K
Income tax = (P415K-P400K) x 20% +22,500 = P25,500
D Software Inc., a DC, is engaged in developing virtual games and has the following transactions:
a. billed P10M to its sole customer which is its parent company located in the US in 2024
b. collected P6M of the total billed services in 2024 and P1M in 2025
c. dividends from parent company amounting to P1M for 2024; dividends are received by D Software Inc in 2025
d. one-time sale of old computers used in gaming development to its employees amounting to P25,000 in 2024, which are fully paid in 2025
For 2024, how much is the total income tax from its operating income assuming total allowable deductions is P3.5M?
P10M + P1M + P25,000 = P11,025,000
P11,025,000 - P3,500,000 = P7,525,000
P7,525,000 x 25% = 1,881,250
X&Y Partnership incurred the following:
a. gross income of partnership amounting to P3M
b. other income of partnership amounting to P50,000
b. allowable deductions of partnership amounting to P1M
c. total assets of partnership of P80M
d. interest income from domestic bank of Partners X and Y are P10,000 and P90,000 respectively
e. gross income of Partners X and Y are P400,000 and P500,000 respectively
d. allowable deductions of Partners X and Y are P80,000 and P100,000 respectively
Assume sharing of Partners X and Y is 35:65 as a GP, how much is the share of distributable income of Partner Y and taxable income of Partner Y to be reported in BIR Form 1701?
income tax = (P3M +P50K - P1M) x 20% = P410K
distributable income of GP = P3M +P50K - P1M - P410K = P1,640,000
share of distributable income Partner Y = P1,066,000 (P1,640,000 x 65%)
taxable income = P500K - P100K = P400K
C left an estate composing a land used as a parking lot. Total rental is P1M and total allowable deduction is P200K. Rental is inclusive of VAT and net of withholding tax. Income of 80K is distributed for the month.
How much is the income tax of the estate?
rent = 1M / (1.12-0.05) = 934,579.44
taxable income = 934,579.44 -200K-80K = 654,579.44
income tax = (654,579.44 - 400K)*20% + 22,500 = 73,415.89
F Consulting Inc. is a management consultancy company and has the following revenue transactions in 2024:
a. management fees representing services rendered for the year amounting to P3M
b. fire insurance benefit received from insurance company amounting to P350,000; the Company claimed deductible expense from prior year of P100,000 on loss from fire
c. other professional fees amounting to P75,000
d. interest from foreign bank in HK amounting to P12,000
e.interest from local bank in PH amounting to P10,000
Assume the following:
a. management fees and other professional fees are subjected to withholding tax on professional fees at 15%
b. interest income is net of 2% withholding tax from HK; the Company is allowed by BIR to claim the foreign tax withheld from HK
c. deductible expenses of P2M
d. company's total assets without land is P150M
e. ignore any VAT impact
How much is the (1) taxable income and (2) income tax due that the Company will report in its BIR Form 1702-RT in 2024?
(P3M/.85) +(P75K/.85) + (350k-100k) + (P12K/.98) = P3,879,891.96
P3,879,891.96 - P2M = P1,879,891.96
RCIT = P1,879,891.96 x 25% = P469,972.99
MCIT = P3,879,891.96 x 2%
A&B Partnership incurred the following:
a. gross income of partnership amounting to P2M
b. allowable deductions of partnership amounting to P800,000
c. total assets of partnership of P50M
d. advance drawings of Partner A of P150,000 gross of 10% withholding; no other withholding done by GPP
e. gross income of Partners A and B are P200,000 and P300,000 respectively
d. allowable deductions of Partners A and B are P50,000 and P70,000 respectively
Assume sharing of Partners A and B is 60:40, how much is the income tax payable of Partner A in a GPP?
distributable share = P2M - P800K = P1.2M
share of Partner A = P1.2M x 60% = P720K
Taxable income = P200K-P50K+P720K = P870K
Income tax expense = ((P870K-P800K)x25%)+102.5K = P120,000
Tax withheld = P150K x 10% = P15K
Income tax payable = P120K - P15K = P105K
D created 2 trusts for the benefit of E as follows:
Gross income of Trust 1 P3M
Gross income of Trust 2 P4M
Deductible expense of Trust 1 P1M
Deductible expense of Trust 2 P1.5M
Income tax paid for Trust 1 P600K
Income tax paid for Trust 2 P800K
How much is the income tax payable of Trust 2
Consolidated net income = P3M + P4M - P1M - P1.5M = P4.5M
Consolidated income tax = P1,152,500 (graduated tax rates)
Income tax excess = (P4M-P1.5M)/P4.5M x 1,152,500 = 640,277.78 - 800,000 = 159,722.22
X Partnership was created in 2022 and is engaged in events planning services and earned/incurred the following:
a. Service fees of P8M net of 2% withholding tax
b. Cash advances of P5M received from clients to be paid to third party suppliers such as flower shops, band, caterers, etc. Receipts/invoices issued by third party suppliers are in the name of the clients
c. Interest expense from loan amounting to P70,000
d. Interest income (gross amount) from bank amounting to P20,000
e. Depreciation expense of P100,000 based on book value amounting and P120,000 based on fair market value
f. Representation expense of P90,000
g. Bad debts of P50,000 written off from uncollectible receivables
h. net loss carried over from prior year of P120,000
How much is the income tax payable?
gross revenue = (P8M/.98) P8,163,265.31
interest arbitrage = P70K - (P20K x 20%) = P66K
total deductions = P66K + P100K + P80K + P50K + P120K = P416K
taxable income = P8,163,265.31 - P416K = P7,747,265.31
income tax expense = P7,747,265.31 x 25% = P1,936,816.33
income tax payable = P1,936,816.33 - (P8,163,265.31 x 2%) = P 1,773,551.02
X&Y Partnership incurred the following:
a. gross income of partnership amounting to P3M
b. other income of partnership amounting to P50,000
b. allowable deductions of partnership amounting to P1M
c. total assets of partnership of P80M
d. interest income from domestic bank of Partners X and Y are P10,000 and P90,000 respectively
e. gross income of Partners X and Y are P400,000 and P500,000 respectively
d. allowable deductions of Partners X and Y are P80,000 and P100,000 respectively
Assume sharing of Partners X and Y is 35:65 as a GP, how much is the final tax of Partner X if Partner X is a Resident Alien?
income tax = (P3M +P50K - P1M) x 20% = P410K
distributable income of GP = P3M +P50K - P1M - P410K = P1,640,000
share of distributable income Partner x = P574,000 (P1,640,000 x 35%)
final tax = (P574,000 x 10%) + (P10,000 x 20%) = P59,400