Illustration 31.

3 - Payment of Income Tax

a. Time of payment - at the time the return is filed
Computation of installment payments
Case 1
Taxable income 400,500
Tax due on 400,000 30,000
Tax due on 500 x 25% 125
Total 30,125
Less: Tax withheld -12,000
Tax payable 18,125
Installment payment (30,125/2) 15,063
1st installment (15,063 - 12,000) 3,063
Amount due 1st installment 3,063
Amount due 2nd installment 15,063
Total 18,125
Case 2
Tax Due Tax withheld Balance
Compensation income 20,000 4,000 16,000
Business income 40,000 30,000 10,000
Total 60,000 34,000 26,000
Installment payments (60,000/2) 30,000
1st installment 30,000
Tax withheld -34,000
Amount due, 1st installment 0
2nd installment 30,000
Less: Tax withheld (excess over 1st installment) -4,000
Amount due, 2nd installment 26,000
Case 3
Mr. Cruz Mrs. Cruz Total
Tax on business income 1,700 1,800 3,500
Taxes withheld 500 800 1,300
Tax payable 1,200 1,000 2,200
Installment payments (3,500/2) 1,750
1st installment 1,750
Less: Tax withheld 1,300
Amount due, 1st installment 450
Amount due, 2nd installment 1,750
Total 2,200
Example 1
Tax ascertained upon audit/examination 31,000
Less: Tax shown on taxpayer's return -8,500
Deficiency income tax 22,500
Example 2
Tax ascertained upon audit/examination 50,000
Less: Tax shown on taxpayer's return 8,500
Deficiency tax ascertained in the first
audit or examination/investigation and
previously assessed/collected 22,500
Total 31,000
Less: Tax previously abated, credited or
otherwise repaid in respect of such tax -8,500 22,500
Deficiency income tax 27,500
Example 3
Tax ascertained upon audit/examination 125,000
Less: Tax shown on return 8,500
Deficiency tax ascertained in the first
audit or examination/investigation and
previously assessed/collected 22,500
Deficiency tax ascertained in the second
audit/examination/investigation and
previously assessed/collected 27,500
Total 58,500
Less: Tax previously abated 8,500
Deficiency taxes 22,500 31,000 27,500
Deficiency income tax 97,500
Example 4
Tax ascertained upon audit/examination 25,000
Less: Tax shown on taxpayer's return None
Deficiency income tax 25,000
Example 5
Tax ascertained upon audit/examination 75,000
Less: Tax shown on return None
Deficiency tax ascertained in the first 25,000
Less: Tax previously abated None -25,000
Deficiency income tax 50,000
Example 6
No income tax return was filed by the taxpayer
Tax ascertained upon audit/examination 17,500
Less: No return was filed None
Deficiency income tax 17,500
Example 7
Tax ascertained upon audit/examination 42,000
Less: No return was filed None
 Deficiency tax ascertained in the first 17,500
Total 17,500
Less: Tax previously abated None 17,500
Deficiency income tax 24,500
1. C.
2. B.
3. A
4. A
5. A
Gross sales 420,000
Less: amount not subject to EWT -250,000
Income subject to EWT 170,000
EWT Rate 1%
Amount of EWT 1,700

32-2
Gross sales 240,000
EWT rate 2%
Amount of EWT 4,800