Income Taxation by Ballada PDF

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Chapter 7True or False T 6. T 11. T 16. F 21. F (should be MWE) 26. F (should be MWE) 31. T 36. F F 7. F 12. T 17. T 22. T 27. F 32. T 37. F F 8. F 13. T 18. F 23. F 28. F 33. F 38. T T 9. F 14. T 19. T 24. T 29. T 34. F T 10. T 15. T 20. T 25. T 30. T 35. T Multiple Choice Multiple Choice Theor...

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Chapter 7 True or False 1. T 6. 2. F 7. 3. F 8. 4. T 9. 5. T 10.

T F F F T

Multiple Choice Theory 1. A 6. 2. A 7. 3. E 8. 4. D 9. 5. B 10.

11. 12. 13. 14. 15.

B B C D D

T T T T T

11. 12. 13. 14. 15.

C A E D C

* Jennifer L. Income from insurance of father: Amount received Less: Cost Purchase price Additional premiums Income from endowment policy: Proceeds Less: Premiums paid Proceeds of crop insurance Total ** Patrick S. Net income before write -off Less: Bad debt written off Taxable income Bad debt recovery Income Problem - Faith Company Item Category A Employees 1. Benefits under BIR approved plan. 2.  Gratuitous pay of one- month for every year of service.

3. Cash equivalent of unused vacation leave credits. 4. Cash equivalent of unused sick leave credits. Category B Employees 1. Gratuitous pay of one- month for every year of service.

2. Cash equivalent of unused vacation leave credits. 3. Cash equivalent of unused sick leave credits.



16. 17. 18. 19. 20.

F T F T T

16. D 17. D

21. 22. 23. 24. 25.

F (should be MWE) T F T T

Multiple Choice Problem 1. C 6. 2. D 7. 3. A 8. 4. B 9. 5. A 10.

A C C D D

26. 27. 28. 29. 30.

F (should be MWE) F F T T

31. 32. 33. 34. 35.

T T F F T

36. F 37. F 38. T

11. B* 12. C**

1,000,000 400,000 100,000

500,000

500,000

2,000,000 1,600,000 (11) 1 400,000 40,000 360,000 40,000 40,000

2 (72,000) 10,000 (82,000) 10,000 -

3 16,000 24,000 (8,000) 20,000 12,000

Subject to (S) or Exempt (E)

E E

E E

E

E E

400,000 100,000 1,000,000 Total

(12)

52,000

Reason

Explicitly excluded from gross income. Excluded from gross income it being in the nature of benefit received on account of separation due to causes beyond the employees’ control. Qualifies as part of separation benefits excluded from gross income. Qualifies as part of separation benefits excluded from gross income.

Excluded from gross income it being in the nature of benefit received on account of separation due to causes beyond the employees’ control. Qualifies as part of separation benefits excluded from gross income. Qualifies as part of separation benefits excluded from gross income.



Chapter 8 True or False 1. T 6. 2. T 7. 3. T 8. 4. T 9. 5. T 10.

T T T T T

Problems Thaddeus 1. P94,118 2. P266,667 3. P200,000

11. 12. 13. 14. 15.

T T T T T

16. 17. 18. 19. 20.

T T T T T

21. T 22. T 23. T

4.1 Fringe Benefit Expense Fringe Benefit Tax Expense Cash 4.2 Fringe Benefit Expense Fringe Benefit Tax Expense Cash

Theodore 1. Monthly rental Multiply by: Taxable portion Monetary value Divide by: 1998 Factor Grossed-up monetary value Multiply by: 1998 Tax rate Fringe benefit tax due

P20,000 50% P10,000 66% P15,152 34% P5,152

Therese 1. P500,000 2. Acq. cost, exclusive of interest Divide by Monetary value Divide by: 1999 Factor Grossed-up monetary value Multiply by: 1999 Tax rate Fringe benefit tax due Dominique, Daniel & Daphne Fair market value Less: Acquisition cost 1. Amortization base Divide by: Est. useful life 2. Annual amortization

200,000 94,118 294,118

11. 12. 13. 14. 15.

D D C A C

16. 17. 18. 19. 20.

E A B A F

21. E 22. D

4.3 Fringe Benefit Expense Fringe Benefit Tax Expense Cash

200,000 35,294 235,294

200,000 66,667 266,667

2. Acquisition cost Multiply by Annual value Multiply by Annual monetary value 3. Acq. cost or zonal value (whichever is higher) Divide by: 2000 Factor Grossed-up monetary value

P450,000 5 years P 90,000 67% P134,328 33% P 44,328

P5,000,000 3,500,000 P1,500,000 15 years P 100,000

Multiple Choice-Theory 1. C 6. F 2. D 7. E 3. C 8. E 4. A 9. C 5. D 10. A

P5,000,000 5% P 250,000 50% P 125,000 P5,500,000 68% P8,088,235

3. Cost shouldered by employer Divide by: 2000 Factor Grossed -up monetary value

3. Fair market value Multiply by Annual value Divide by: 2007 Factor Grossed- up monetary value Multiply by: 2007 Tax rate Fringe benefit tax expense

4. Fair value or zonal value (whichever is higher) Less: Cost to Theodore Monetary value Divide by: 1999 Factor Grossed-up monetary value Multiply by: 1999 Tax rate Fringe benefit tax due

P6,000,000 4,500,000 P1,500,000 67% P2,238,806 33% P 738,806

P300,000 68% P441,176

P5,000,000 5% P 250,000 68% P 367,647 32% P 117,647

4. Fringe benefit expense Fringe benefit tax expense Income constructively Realized Cash

100,000 117,647 100,000 117,647

Chapter 9 True or False 1. T 6. 2. T 7. 3. F 8. 4. F 9. 5. F 10.



T T T T T

11. 12. 13. 14. 15.

T F T T F

16. 17. 18. 19. 20.

T F F F T

21. 22. 23. 24. 25. 26.

F F T T T F

Multiple Ch oice Theory 1. D 6. E 2. E 7. D 3. E 8. A 4. E 9. D 5. D 10. D

11. 12. 13. 14.

A B E A

Multiple Choice Problem 1. C * 6. 2. B 7. 3. A 8. 4. D 9. 5. B 10.

C C A C A

11. 12. 13. 14. 15.

B (P100,000 x 50%) C 16. A*** B 17. C C 18. A**** C** 19. D***** 20. B******



 *Albert F. Capital gains: Jewelry (P69,000 x 50%) M. Benz (P30,000 x 50%) Refrigerator (P1,000 x 100%) Less: Capital loss -Volks (P8,500 x 100%) Net capital gain

***Beauty Corp. Gross profit from sales Less: Business expenses Normal tax taxable income Multiply by normal tax rate Normal tax

34,500 15,000 1,000 (1)

(16)

*****Truman Corp. Sale 3 On P100,000 5% 90,000 10% Sale 4 (P50,000 x 5%) Total

50,500 8,500 42,000

5,000 9,000

2,000,000 1,100,000 900,000 30 % 270,000

****Mr. Bening Selling price (P100 x 1,400) Less: Cost Lot 1 – 600 shares Lot 2 – 450 shares Lot 3 – 300 shares Lot 4 – 50 shares (P15,000/150 shs. x 50 shs.) Gain on sale

****** Thora B. Selling price (P110 x 110 shares) Less: Cost from Lot 1 (P12,000/120 shares x 110 shares) Capital gain Multi ply by: Capital gain tax

14,000 2,500 16,500

(19)

**Beauty Corp. Capital gain tax on shares Of domestic corp.: On P100,000 5% 20,000 10% Capital gain tax on land (P1,000,000 x 6%) Total

5,000 2,000

7,000

(15)

60,000 67,000

140,000 40,000 36,000 28,000 5,000 (18)

109,000 31,000

12,100

(20)

11,000 1,100 5% 55

Chapter 10 True or False 1. F 6. 2. T 7. 3. F 8. 4. F 9. 5. T 10.

T T F F T

11. 12. 13. 14. 15.

Multiple Choice- Problem 1. A 6. B 2. A* 7. A 3. D* 8. D 4. B** 9. C 5. D** 10. B***

T T F T T

16. 17. 18. 19. 20.

11. 12. 13. 14. 15.

A*** B C**** B**** B****

*West Central Col lege Gross income: Tuition fees Miscellaneous fees Income from book store Income fr om school canteen Deductions: Salary, allowances and bonus Other operating expenses (depreciation on capital expend iture assumed included) Taxable income Multiply by Income tax



T F T T T

21. 22. 23. 24. 25.

16. 17. 18. 19.

T T T F F

True or False 1. T 6. 2. T 7. 3. T 8. 4. T 9. 5. T 10.

T T T T T

Multiple Choice-Theory 1. D 6. B 2. B 7. B 3. E 8. A 4. A 9. E 5. C 10. C

11. 12. 13. 14. 15.

D C D A B

16. A 17. C

C D D C

9,500,000 1,200,000 350,000 180,000

11,230,000

6,400,000

2,600,000

(2)

9,000,000 2,230,000 10% 223,000

Gross income Deductions: Salary, allowances and bonus Other operating expenses Capital expenditures Additional classrooms Library furniture & eqpt. Taxable income Multiply by Income tax

11,230,000 6,400,000 2,600,000 1,300,000 400,000

(3)

10,700,000 530,000 10% 53,000



 **Central Luzon University Gross income: Tuition fees Miscellaneous fees Deductions: Salary and bonus Other operating expenses (depreciation on capital expend iture assumed included) Net income from school activities Add: Net income from school canteen Taxable income Multiply by Income tax Less: Quarterly income tax paid Income tax still due ***Domestic Corp. 2006 Gross profit from business Business expenses Net operating loss 2007 Gross profit from business Business expenses Net operating income Less: NOLCO from 2006 Net income 2008 Gross profit from business Business expenses Net operating income Less: NOLCO from 2006 Net income

12,800,000 2,100,000

14,900,000

8,500,000

3,750,000

(4)

600,000 700,000 (100,000) 500,000 470,000 30,000 30,000 0

12,250,000 2,650,000 120,000 2,770,000 10% 277,000 36,000 241,000

Gross income Deductions: Salary and bonus Other operating expenses Capital expenditure School building Net income from school activities Add: Net income from school canteen Taxable income Multiply by Income tax Less: Quarterly income tax paid Income tax still due

2009 Gross profit from business Business expenses (10) Net operating loss 2010 Gross profit from business Business expenses Net operating income Less: NOLCO from 2009 Net income (11)

900,000 850,000 50,000 50,000 0

850,000 900,000 (50,000) 920,000 620,000 300,000 50,000 250,000

14,900,000 8,500,000 3,750,000 2,150,000

(5)

****Mr. A Selling price Less: Cost Indicated loss Loss not recognized (P1,000 x 60/100) Purchase price Add: Loss not recognized Basis of shares acquired on June 22

14,400,000 500,000 120,000 620,000 10% 62,000 36,000 26,000

6,000 7,000 1,000 (13)

600 6,500 600

(14 )

7,100

Selling price Less: Basis of shares received Gain on sale (15 )

8,000 7,100 900

Chapter 11 True or False 1. T 6. 2. F 7. 3. T 8. 4. T 9. 5. F 10.

T T T F T

11. 12. 13. 14. 15.

T F T T F

Multiple Choice-Theory 1. B 6. E 2. F 7. D 3. D 8. D 4. D 9. F 5. D 10. C

11. A 12. C & D

Chapter 12 True or False 1. 2. 3. 4. 5.



T T T T T

6. 7. 8. 9. 10.

T T T T T

Multiple Choice Theory 1. A 2. E 3. C 4. D

Problem 1. 145,000 2. 50,000 3. 35,000 4. 15,667 5. 19,333

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