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Chapt-13 Income Taxes - Partnerships, Estates & Trusts

Chapt-13 Income Taxes - Partnerships, Estates & Trusts

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INCOME TAXATION 5TH Edition (BY: VALENCIA & ROXAS)SUGGESTED ANSWERS
Chapter 13: Income Taxes of Partnerships, Estates & Trusts
CHAPTER 13
INCOME TAXES OF PARTNERSHIPS, ESTATES &TRUSTS
Problem 13 – 1 TRUE OR FALSE
1.False – not all partnership, only commercial partnership.2.False – tax exempt, but required to file.3.False – the tax withheld in creditable.
4.
 True – starting on the 4
th
year of operation.5.True6.True
7.
 True – because it is withheld with final tax.8.True9.False – trading business income will make the partnership a commercial partnership.10.False – still subject to final tax of 10%.
11.
 True – if created through gratuitous transfer, not more than 10 years and nocontribution is made by the co-owners.12.True13.True
Problem 13 – 2 TRUE OR FALSE
1.True2.False – It shall be in writing either as trust inter-vivos or through a will.3.False – A trustor is the person who establishes the trust, not the trustee.4.True5.True6.True7.True
8.
False – P50,000.9.True10.True11.False – the personal exemption is P50,000.12.True
Problem 13 3 Problem 13 4
1. A1. A2. B2. A3. C3. B4. C4. A5. B5. C6. C6. A7. B7. B8. B8. D9. B9. B10. A10. A11. C
Problem 13 5 A
Net profit from trading business of the partnershipLess: Income tax (P400,000 x 30%)P400,000120,000
95
 
INCOME TAXATION 5TH Edition (BY: VALENCIA & ROXAS)SUGGESTED ANSWERS
Chapter 13: Income Taxes of Partnerships, Estates & Trusts
Income after taxInterest income, net of final withholding taxDividend income Total income for distribution to partnersDivide by profit and loss ratioShare of each partnerMultiply by dividend tax rateIncome tax on the distributive share of Mitzi BaguinganP280,0004,00010,000P294,0002P147,00010%P 14,700
Problem 13 – 6
(1)CNet income (P400,000 P160,000)P240,000Multiplied by applicable income tax rate 30%Income tax of the partnershipP 72,000(2)APartnerships income after tax (P240,000 P72,000)P168,000Divided by profit and loss ratio 1/2Share of AP 84,000Less: Final tax (P84,000) x 10% 8,400As share, net of final taxP 75,600
Problem 13 – 7
1.A J, Opting itemized deduction:Share of J in the Partnership (325,000-175,000) x 70%Other business income Total business incomeLess: Itemized deductions (excluding contribution)Net income before contributionLess: ContributionActual, P1,750 + (15,000 x 70%) =P12,250Limit, P155,000 x 10% or P15,500AllowedNet taxable before personal exemptionLess: Personal exemption (P50,000 + 25,000)Net taxable income of JP105,00085,000P190,00035,000P155,00012,250P142,75075,000P 67,7502.DR, opting for standard optional deduction:Share in the partnership, gross (P325,000 x 30%)Other business income Total business incomeLess: Optional standard deduction (P162,500 x 40%)Net income before personal exemptionLess: Personal exemption - singleNet taxable incomeP 97,50065,000P162,50065,000P 97,50050,000P 47,500
Problem 13 – 8
Net income from trading business of the partnershipP400,000Divided by profit and loss ratio 2
96
 
INCOME TAXATION 5TH Edition (BY: VALENCIA & ROXAS)SUGGESTED ANSWERS
Chapter 13: Income Taxes of Partnerships, Estates & Trusts
Share of each partnerP200,000Add: Compensation income 240,000 Total income before personal exemptionP440,000Less: Personal exemption 50,000Net taxable incomeP390,000Note: Interest income and dividend income have been subjected to final tax, hence, not to beincluded anymore in an annual taxable income.
Problem 13 – 9
1.DNone. The objective of co-ownership is to preserve the co-ownership property, therefore,not subject to tax.2.B The co-owners in an exempt co-ownership are liable for the tax in the income theyreceived from the co-ownership. They should file the return and pay the correspondingtax based on their separate and individual capacity. The net taxable income of Robert is computed as follows:Share from the income of co-ownershipLess: Personal exemption – singleNet taxable incomeP1,000,00050,000P 950,000Income received by the co-owners is already net of itemized deductions of the co-ownership,therefore, the co-owners in their individual capacity is not anymore entitled to optionalstandard deduction. Inasmuch as the related expenses have been deducted before thedistribution of income to the co-owners, (Sec. 34 L).Supreme Court Ruling - Deductions and exemptions are highly disfavored in law. They mustbe construed strictly against the taxpayer, (Commissioner of Internal Revenue vs. P. J. KienerCompany, LTD., 65 SCRA 143).
Problem 13 10 D
Income after expenses but before distribution to heirP400,000Less: Gross amount distributed to heir (P85,000/85%)P100,000Exemption 50,000 150,000Net taxable incomeP250,000
Problem 13 – 11
1.BIncome of the grantorIncome of trust A - revocable Total income of the grantorLess: Total expensesGrantor – business expenseTrust A – business expenseGrantor’s income before personal exemptionsP400,000200,000P1,000,000500,000P1,500,000600,000P 900,0002.DIncome of trust B – irrevocable trustLess: Expenses of irrevocable trust – BNet income before exemptionLess: Personal exemptionNet taxable income of all the trustP200,000100,000P100,00050,000P 50,000
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hello. do you have 2013-2014 solutions manual for this book?
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dude do you have any chapter 12 answer keys? 2013-2014
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