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Camry, was from a farmer’s family owning 1 hectare of land with assessed value of 1,800,000

and a zonal value of 2,000,000, of which he inherited last 2017. This 2018 he is currently
employed in the finance department of League Corporation. He is currently married to Jazz
since 1990. On 2017 he entered into a sweepstakes by the Japanese government and won
PHP 1,000,000, also entering in a nearby supermarket’s raffle draw winning him 7,500 for 2017
and 11,000 for 2018; and he won a prize in a competition in 2017 of 8,000 and in 2018 of
12,000. He was awarded a Ramon Magsaysay Award of 100,000 in 2017. He also owns an
apartment compound earning him 580,000 for 2017 and 650,000 for 2018, net of withholding.
The real property tax amounting to 50,000 for 2017 and 2018, was paid by the lessor in the year
2017 and for year 2018 it was paid by the lessee.

He has earned PHP 800,000 last 2017 and earned PHP 1,000,000 this 2018. Along with his
earnings in the company are some benefits he is entitled to: Uniform allowance: 3,000 for 2017
and 6,000 for 2018; Hazard pay of 2,000 for 2017 and 3,000 for 2018; 3,500 and 6,000 for 2017
and 2018 as his holiday pay; his productivity incentive amounted to 5,000 and 7,500 for 2017
and 2018, respectively; laundry allowance of 4,000 for 2017 and 4,500 for 2018; medical
allowance of 8,000 and 11,000 for 2017 and 2018, respectively; and the other fringe benefit he
is entitled to is 60,000 and 90,000 for 2017 and 2018, respectively. Since Camry is a
permanent employee of the company, he was entitled to a midyear bonus of P10,000 for 2017
and the midyear bonus increased by 50% for 2018. Camry enjoyed a Christmas bonus of
25,500 for 2017 and 30,000 for 2018, he also was given a 13th month pay for 2017 and 2018, of
the same amount of his Christmas bonus. Being a model employee for 2017 he received 9,000
cash and was again recognized as a model employee for the following year thus earning 14,000
cash for 2018. Last 2017, the company celebrated its 50th foundation anniversary and gave
monetary gifts, one of the recipients was Camry, receiving PHP 17,000 and this 2018 the
company celebrated its 20th anniversary of its expansion in the Philippines and fortunately,
Camry received PHP 11,500.

He also, invested time and money in stock exchange, on a portfolio investment personally
manoeuvring the stock investments. Camry (being not engaged in stock trading) has sold stocks
through the Philippine Stock Exchange gaining 100,000 on 2017 and he also earned 200,000
and 90,000 on 2017 and 2018, respectively, from sale of stocks by directly selling to an
interested buyer. He received dividend from a domestic corporation which has its 70% of
income coming within the Philippines of 90,000 and 80,000 for 2017 and 2018, respectively. He
also received dividend of 90,000 and 80,000 from a domestic corporation which has its 30% of
income earned in the Philippines. Another investment in the stock exchange earned him a
dividend from resident foreign corporations of a total of 80,000 and 100,000 for 2017 and 2018
respectively. Half of the dividends from these resident foreign corporations were from a
corporation which has its 70% of earnings coming from within the Philippines and the other half
was from a foreign corporation with 30% of its total earnings coming from within the Philippines.

Camry would like to make sure that his children will not experience the hardships of life he has
experienced in his younger years. And for that reason he ventured in entrepreneurship, he has
established EDATU, advertising and souvenir business, last 2016. In order to form the business
he entered a loan contract with Tan Bank, thus incurring an interest expense of 100,000 on
2017 and 150,000 for 2018. He also deposited in Tan Bank in both domestic and foreign
currency units, hence, earning interest of 30,000 on 2017 and 45,000 on 2018 for his short term
domestic-currency deposit; 26,500 on 2017 and 18,200 on 2018 for his long term domestic-
currency deposit; and interest on foreign currency bank deposit of 25,000 and 20,000, for 2017
and 2018, respectively.
On the date of establishment of the business, he hired 7 employees. The following is the names
with their monthly salaries for 2017 and 2018:

Albus, a senior citizen below poverty level - 10,000


Severus - 12,000
Harry - 18,000
Ron - 10,000
Hermione - 15,000
Voldemort - 17,000
Sirius, a man with a missing limb - 19,000

In order to have a quality service of EDATU, Camry has decided to spend for trainings of all
employees totaling a cumulative training expense for two years, PHP 145,000. In 2017, the
training expense allocated for rank and file PHP 40,000, and for managers and supervisors
training PHP 65,000. The remaining was for 2018 training of managers only. EDATU also
provides fringe benefits to its employees: 100,000 for those hired in rank and file position,
250,000 for those in managerial position, and 340,000 for those in a supervisory position.

EDATU was able to earn both from its advertising services and its souvenir shops of (net of
withholding) PHP 2,300,000 and PHP 2,000,000 on its second year of operations, while
incurring costs of its services and sales of PHP 650,000 and PHP 1,200,000, respectively. In
2018 EDATU earned (net of withholding) 7,000,000 and 4,500,000 for its souvenir shop and
advertising services, respectively, while incurring a cost for its services and goods of PHP
1,300,000 and PHP 2,650,000 respectively. In relation to the revenue and sales of EDATU, was
the policy of selling on account, and for that reason has established for 2017 and 2018,
respectively: 56,000 and 40,000 as allowance for uncollectible accounts. In the year 2017,
Camry has invited potential business partners, suppliers, and customers to lunch meetings that
totaled a cost of PHP 30,000. And to continue their good business relationship and expand his
network, he has continued to invite them for lunch meetings on 2018 incurring a total of PHP
50,000. Camry, has established a pension fund for his employees incurring a current service
cost of 50,000 and 60,000 for 2017 and 2018, respectively and a past service cost of 35,000
and 80,000 for 2017 and 2018 respectively. EDATU’s equipment for advertising services has
depreciated by 58,000 and 70,000 on 2017 and 2018 respectively. On 2015 as a corporate
social responsibility program, EDATU has constructed a breastfeeding station, costing PHP
2,000,000 and participated in the “Adopt-A-School Program, by donating in this priority activity
of the government in the amount of PHP 60,000 and PHP 30,000, in 2017 and 2018,
respectively. Unfortunately, on 2017 typhoon Lanta has damaged the goods of EDATU,
recognizing PHP 180,000 loss in its profit and loss statement. EDATU has incurred an
extraordinary expense of 10,000 for 2017 and 5,000 for 2018. Some of the taxes that EDATU
has incurred are the following: Special Assessment of PHP 20,000 and 25,000 for 2017 and
2018, respectively; municipal tax of 10,000 and 12,000 for 2017 and 2018, respectively;
Documentary stamp tax of 3,000 for 2017 and 3,500 for 2018; other percentage tax of 8,000
and 9,500 for 2017 and 2018, respectively; and donor’s tax of 8,000 and 7,000 for 2017 and
2018 respectively.

In addition to his own business, EDATU, Camry is engaged in two partnerships. First
partnership he is currently affiliated with is a firm rendering accounting services to small
companies and other sole proprietors receiving share in the partnership profits net of
withholding, PHP 100,000 and PHP 250,000 for 2017 and 2018, respectively. On the other
hand, because of the necessity of the students in regards with books, he has entered into a
partnership with Singko, Ocho, and Sais for selling of books for accountancy students, and
earning PHP 150,000 and PHP 230,000 for 2017 and 2018, respectively. Being a writer in
nature, he created a literary composition, giving him the right to royalty of 15,000 in 2017 and
24,000 in 2018. Another source of his income is by earning from his loan receivable an interest
of 35,000 and 40,000, respectively.

With his earnings and winnings he sold a residential land on 2017 with a fair value of 4,500,000
and sold it for 500,000 higher than its fair market value. He also sold his principal residence last
2017 at a price of 6,000,000 and transferred to another subdivision purchasing house and lot to
serve as his principal residence for 5,500,000. On 2018, he found out that the reason for the
vacancy was the murder of the previous owner, terrified, he sold it immediately at a lower price
of 3,000,000 in order to buy the neighbouring house and lot worth 3,000,000. The fair value of
the house and lot is 6,000,000.

The following are his dependents:


Hagrid, legitimate child, 21 years old, unmarried, not gainfully employed, dependent to the
taxpayer turning 22 n the year 2018
Dolores, aunt, 46 years old, PWD
Malfoy, legitimate child, 18 years old, unmarried, not gainfully employed, dependent to the
taxpayer
Longbottom, nephew, 21 years old, turning 22 this year 2015, unmarried, not gainfully
employed, dependent to the taxpayer
Grindelwald, adopted child, 4 years old, dependent to the taxpayer
Luna, Legitimate child, 19 years old, not gainfully employed, dependent to the taxpayer, married
in the year 2017

Compute the following:


1.If the taxpayer is a resident citizen-rank and file employee
a. Taxable compensation income subject to RIT for 2017 and 2018 respectively
b. Total regular deductions for 2017 and 2018
c. deductible tax expense for 2017
d. Special deductions for 2017 and 2018
e. Final tax withheld for 2017 and 2018
f. Taxable income subject to RIT for 2017 and 2018
g. tax due for 2017 and 2018
h. tax payable for 2017 and 2018
i. Fringe benefit tax due for 2017
j. capital gains tax due for 2017
k. If the taxpayer is a manager how much is the taxable compensation subject to RIT 2017?
J. total deductible salaries expense for 2017
l. total amount of additional exemption for 2017 and 2018 respectively
m. Tax due and tax payable for the year 2018 if the taxpayer chooses the 8% option of TRAIN
law

2. If the taxpayer is a non resident citizen-rank and file employee


a. Taxable compensation income subject to RIT for 2017 and 2018 respectively
b. Total regular deductions for 2017 and 2018
c. deductible tax expense for 2017
d. Special deductions for 2017 and 2018
e. Final tax withheld for 2017 and 2018
f. Taxable income subject to RIT for 2017 and 2018
g. tax due for 2017 and 2018
h. tax payable for 2017 and 2018
i. Fringe benefit tax due for 2017
j. capital gains tax due for 2017
k. If the taxpayer is a manager how much is the taxable compensation subject to RIT 2017?
l. Tax due and tax payable for the year 2018 if the taxpayer chooses the 8% option of TRAIN
law