TAX 1 EXCERCISES

I. A Non-resident Citizen, received the following from sources within the Philippines during the
year 2016:
Interest income from PNBank savings account, net of final tax P 16,000.00
Interest income from a Tax-free Covenant Bond 8,000.00
Interest income on long-term deposits, pre-terminated on the 4th year 12,000.00
Interest Income from Notes Receivable 2,000.00
Interest Income from FCDU maintained with PNBank (P45:$1) $ 500.00
Capital gains on sale of shares of stock, not listed or traded through a local stock P 180,000.00
exchange
Capital loss on sale of shares of stock, not listed or traded through a local stock 60,000.00
exchange
Capital gains on sale of shares of stock, not listed or traded through a local stock 120,000.00
exchange
Sold residential lot located in the Philippines, held as capital asset (Appraised P 580,000.00
value by an Independent Appraiser – P800,000.00; Assessed Value – P700,000.00;
Zonal value – P680,000.00). The proceeds was used to build his principal
residence amounting to P1,000,000.00.
Dividends received from a Resident Foreign Corporation 8,000.00
Dividends received from a Domestic Corporation 6,000.00
Royalties from musical composition 14,000.00
Winnings (25% of which came from PCSO winnings) 12,000.00
Prize received from Essay contest 1,500.00
Prize received from Bowling Tournament 10,000.00
Prize received from being an outstanding Resident of their barangay 20,000.00
Indemnity for Moral Damages from Libel suit filed 500,000.00
Appreciation in the value of his real property due to a road – widening project by 300,000.00
the Government
Separation pay received due to company retrenchment program 150,000.00
Rental Income from 4-door apartment inherited from his deceased Father 80,000.00
Income from Services rendered as a professional mortician 60,000.00

Compute:

1 Final Tax withheld on Interest Income

2 At the end of the year, the sale of shares of stock will result in Annual Capital Gains Tax
Payable/Refundable:
3 The Capital Gains Tax on the sale of real property
4 Total Final Tax Due on Dividends, Royalties, Winning and Prizes
5 Total Cash inflow Not Subject to Tax/Exempt:

II Anational athlete, received the following during the year:

Ramon Magsaysay award P 50,000.00
Athlete of the year award 100,00.00
Prize – Jollibee raffle 5,000.00
Prize for winning the silver Olympic medal 500,000.00
Cash award from Mr. Alfred Lim 250,000.00
 Cash from Nissan as a gift 1,000,000.00
Winnings – Philippine sweepstake 100,000.00
Gambling winnings 5,000,000.00
The total winnings/awards and prizes not subject to income tax is:

III On 31 October 2015, Jose Caldo sold 800 shares of stock (held as capital asset, acquired at a
cost of P60,000.00) to Chad Mendez at P200 per share. The FMV of the shares that time is
P180/share. Chad assumed a P60,000 mortgage on the shares purchased. They agreed that
the balance shall be paid in 5 equal monthly installments starting November 2015.

May Jose Caldo pay the CGT in installment? If yes, how much is the CGT due in 2016?
In the problem above, assuming that the mortgage assumed is P80,000, how much is the
contract price and the CGT due in 2016?

IV. Mr. Kanor Macgagor, single received the following during the taxable year:

Proceeds of his life insurance paid at an annual premium of P1M

P12,000 within 20 years
Proceeds of his mother’s life insurance paid at an annual
premium of P10,000 within 20 years P5M
House and lot inherited from his mother P3M
Rent income from inherited properties P360,000

For income tax purposes, how much of the above items must be included in his gross income?

V. Ed Folayang, married had the following transactions:

2013 Taxable income from business P 70,000.00

Dividends received from:
Resident corporation 3,000.00
Non-resident corporation 1,000.00
Interest from bank deposit 10,000.00
Interest from trade receivable 4,000.00
Capital gain on assets held for 6 months 34,000.00
Capital loss on assets held for 10 months 60,000.00
2014 Taxable income from business 40,000.00
Capital gains on capital assets held for 18 months 46,000.00
Capital loss on assets held for 9 months 6,000.00
Amount received as liquidating dividend (cost = P100,000)
held for 20 months 150,000.00

How much is the taxable income before personal exemption in 2013 and 2014?

In the problem above (#32), How much is the taxable income before personal exemption in
2014?
VI. Empy Layado has the following data during the year:
Basic salary P 400,000.00
Income tax withheld 50,000.00
13th month pay 140,000.00
SSS 2,000.00
PhilHealth 1,800.00
Pag-Ibig 1,700.00
Union dues 500.00
Capital build up contributions in a social fund 2,000.00
Compute the total exclusions from gross income:

VII. Broke Lesnar, citizen and resident of the Philippines had the following data within a calendar
year:
Gross income from business P 800,000.00
Expenses of the business 350,000.00
Interest on Philippine currency bank deposit 10,000.00
Dividend from a domestic corporation 80,000.00
Capital gain on direct sale to buyer of shares of stock of a domestic
corporation (on a selling price of P100,000) 20,000.00
Capital loss on sale of land in the Philippines (on a selling price of P10,000) 200,000.00
The Regular income tax for the year is:

In the problem above (VII), the total of income taxes for the year is:
VIII. Gaylord Bahaghari is a rank and file employee in an Advertising Firm in Makati. In the year 2016,
he had the following compensation record:

Regular Pay P500,000.00

Overtime Pay 200,000.00
13th Month & Other Benefits:
13th Month 20,000.00
14th Month 20,000.00
15th Month 20,000.00
Additional Compensation Allowance 10,000.00
Creditable Withholding Tax 156,000.00
De Minimis Benefits:
Christmas and Anniversary Gifts 3,000.00
Laundry Allowance 2,600.00
Employee Achievement Award 12,000.00
Actual Medical Assistance 5,000.00
Rice Subsidy 18,000.00
Medical Cash Allowance To Employee Dependents 2,500.00
Uniform and Clothing Allowance 5,000.00
Productivity Incentive Allowance 18,000.00
Persons Living with and Dependent on the Taxpayer :
3 Legitimate Children (Aged 22, 23 and 25)
1 Minor Adopted Child
Senior Citizen Mother
Crippled Brother (PWD)

Compute the Following:

a Gaylord’s Total Compensation Income before Personal Exemption
b Gaylord’s Taxable De Minimis Benefits
c Gaylord’s Total Personal Exemption
d Gaylord’s Tax Due/(Refundable) for the year
e If Gaylord is a supervisor, his Tax due/refundable for the year