Problems 06: For Individuals And Corporations

(for class recitation, seatwork, homework)

For each of the following cases in the current taxable year 2019, in good form compute and present the
solutions leading to the correct answers using the appropriate given/illustrated formats or formulas.

Problem 01. In the taxable year 2019, the following data pertain to a corporate business organization:

a. Membership fees and dues in social and athletic clubs paid by the company
for the benefit of the managerial employees P70,000
b. Local traveling expenses paid by company for the travel of his supervisory
employees and the members of their families 180,000
c. De minimis benefits to all employees 90,000
d. A Toyota car benefit for the personal and company use of the company's
sales manager. Said car was purchased under the following terms:
cost price P500,000, 20% down payment on Installment basis payable for
48 months with 15% interest per annum based on the outstanding balance 100,000

Determine the fringe benefit tax and the allowed deduction on fringe benefits.

Problem 02. The following data belong to a corporation – employer in the current year 2019:

a. Educational assistance to supervisors and their children P75,000

b. Contributions of employer-company for the benefit of the emp -
loyees to retirement, insurance and hospitalization benefit plans 50,000
c. Year's rental for an apartment rented out by the company for the
use of its comptroller 60,000

Compute the fringe benefit tax and its related allowed deduction.

Problem 03. A corporate business-employer had the following data for the current year 2019:

a. Cost of Christmas gifts during the celebrations for employees P45,000

b. Employee's expense account 52,000
c. Uniform allowances not over P650 per month.
d. Housing benefits of officials of the Philippine Army 360,000
e. Personal expenses of the officers, paid for by the company- 15,000
employer
f. Monetized unused vacation lease credits 2,700
g. Household personnel benefit 16,500
h. Medical cash allowance of P2,500 per semester to an employee
i. Housing unit furnished to an employee, where said unit was situated Inside the premises of the
business 45,000
 j. Tuition fees in high school of a son of the comptroller-employee,
borne by the employer-company 16,000
k. One week expense on a holiday vacation of the company's vice-
president for finance and his family In a Batangas resort 27,500

Required: Classify and compute for the following items:

1. Income subject to fringe benefit tax.

2. Income exempt from fringe benefit tax.
3. Total amount of fringe benefit tax.
4. The allowed deduction from the gross income related to the fringe benefits.

Problem 04. In the current year 2019, Fishsy Company, a sole-proprietorship business owned by
Mr. Sardinas, granted fringe benefits to its employees as follows:

1. To employees who are officials, managers and/supervisors, P500,000

2. To rank and file employees, 400,000
3. De minimis benefits to employees P300,000 (60% to Officials, 40% to rank and files)

Determine the fringe benefit tax and the related allowed deductions on all fringe benefits.

Problem 05. An employer-business organization had the following data in the taxable year 2019:
a. Fringe Benefit furnished to rank and file employees P540,000
b. Fringe Benefit granted to supervisors and managers 850,000
c. Fringe Benefit granted to employees classified as NRANEBP 160,000
d. Fringe benefits to employees classified as SAFE 250,000

Determine the fringe benefit tax and allowed deduction on fringe benefits.

Problem 06. A business company fringe benefits to its employees in the year 2019 as follows:
a. Fringe benefits in kind: groceries, clothing purchased in cash for the managerial
employees P120,000
b. Housing benefits furnished to the supervisors necessary to the business of the
employer P60,000
c. Car benefit to the chief accountant for his personal and company use. Said car P350,000
was purchased in the employee’s name, fully paid by the employer.

Determine the fringe benefit tax and the allowed deduction on fringe benefits.

Problem 07. An employer- self-employed person showed us its data for the current taxable year 2019:
a. Representation and transportation allowances, fixed in amount, regularly
given to company officials as part of their monthly compensation income P160,000
b. Holiday and vacation expenses of department heads, borne by the company 54,000
c. Other business expenses 653,000
d. Gross profit from Sales 985,000
e. Rental income on business equipment 124,00

Compute the fringe benefit tax and the allowed deduction on fringe benefits.
 CPABLES Multiple Choice Questions In Chapter 06

(for class recitation, seatwork or homework)

For each of the following cases in the current taxable year 2018, in good form compute and present the
solutions leading the correct answers using the appropriate given/ illustrated formats or formulas.

Q01. 1st statement: A fringe benefit exempt from the fringe benefit tax is a taxable income on the part of
the income earner/employee.

2nd statement: A fringe benefit subject to the fringe benefits tax is a taxable income on the part of
the employee.

a. Both statements are wrong

b. 1st statement is wrong, 2nd statement is correct
c. 1st statement is correct, 2nd statement is wrong
d. Both statements are correct

Q02. Fringe benefit tax is computed based on?

a. The monetary value of the fringe benefit

b. The actual value of the fringe benefit
c. The grossed up monetary value of the fringe benefit
d. The fair market value of the fringe benefit

Q03. The employer leases a residential property for the use of the employee. In this case,

a. The monetary value of the benefit is equal to 50% of the rental paid;
b. The monetary value is equal to the entire value of benefit;
c. Deductible expense is equal to the entire value of the benefit;
d. Fringe benefit tax shall be based on the monetary value.

Q04. In the current year 2019, X Company, a sole-proprietorship business owned by Mr, X, granted
fringe benefits to its employees as follows:

1.) To employees who are managers and/supervisors, P540,00

2.) To rank and file employees, P500,000

The fringe tax is:

a. P254, 118 b. P235, 294 c. P172, 800 d. no answer

Q05. Referring to the data in no.04, X Company can claim an amount related to the fringe benefits as
allowed deduction from the gross income. Which is said amount?

a. P794, 118 b. P1, 040, 000 c. P794, 618 d. no answer

Q06. The grossed-up monetary value of the fringe benefit represents the whole amount of Income
realized by the employees which includes-

a. The net amount of money or net monetary value of property which has been
received
b. The amount of fringe benefit tax thereon otherwise due from the employee but
paid by the employer for and in behalf of the employee.
a. A only b. B only c. both A and B d. no answer

Q07. Which of the following fringe benefits is not taxable?

a. Housing privilege Benefit c. Expense Account Benefit

b. Motor vehicle Benefit d. De Minimis Benefit

Q08. One of the following statement is wrong:

a. The fringe benefit tax is imposed on the employer.

b. The fringe benefit tax is imposed on the employee.
c. The fringe benefit tax is withheld at source.
d. The fringe benefit is deductible from the gross income of the employer.

Q09. One of the following statement Is not correct: The basis of the fringe benefit tax is:

a. The monetary value of the fringe benefit.

b. The grossed up monetary value of the fringe benefits.
c. The amount deductible by the employer from gross income.
d. Reflected in the two (2) accounts of fringe benefits and tax.

Q10. One of the following benefits is exempt from fringe benefit tax:

a. Housing Benefit
b. Vehicle benefit
c. Employer’s contribution to retirement, insurance, hospitalization benefits plan for the
employee
d. Answer not given

Q11. Refers to the whole amount of income earned by an employee which includes the net amount of
money or net monetary value of property which has been received plus the amount of fringe
benefit tax due thereon. Which is it?

a. Fringe benefit tax c. Grossed-up monetary value

b. Fringe benefit d. De Minimis Benefit

Q12. To determine the grossed up monetary value of a taxable fringe benefits, the monetary value is
divided by:

a. Basic income tax rate c. Fringe benefit tax rate

b. Final income tax rate d. Grossed Up rate
Q13. Which of the following tax rate is applicable to fringe benefits furnished by the employer to his
employees who are classified as non-resident aliens not engaged in business Philippines?

a. 32% b. 25% c. 15% d. no answer

Q14. Which of the following fringe benefits granted by employer is exempt from the fringe benefit tax?

a. Housing benefit to his supervisors

b. Company service car to its department manager
c. Housing unit to a captain of the Philippine Arm Forces
d. No answer given

Q15. The following personal expenses of the employee which are borne by the employer shall be
treated as taxable fringe benefits:

a. Salaries of household help, personal driver of the employee

b. Payment for the home owners association dues, garbage dues, etc,
a. A only b. both A and B c. B only d. no answer

Q16. Mr. Z is the credit and collection manager of ABC Corporation. In the current year 2019, the
remunerations from employer are as follows:

1. Monthly Salary of P35,000

2. Groceries worth P6,000 monthly
3. Representation and travel expenses to be accounted for, monthly P5,000
4. Rental payments for an apartment reimbursed monthly by the company, P10,000

The year’s total fringes benefit tax to be paid by the corporation-employer is:

A. P316,235 B. P195,840 C.P288,000 D. no answer

Q.17. Referring to the data in no.16 the Corporation can claim an amount related to the taxable fringe
benefits as allowed deduction from the gross income. Which is said amount:

A. P900,000 B. P612,000 C. P672,000 D. no answer

Q18. Tom, a security guard at a Manufacturing Corporation is being granted the following allowances in
the year 2019:

1. Uniform allowance,P500 a month

2. A room for his dwelling located within the compound of the factory, with a rental value of
P1,500 a month.
3. De Minimis benefits valued at P150 a month

The fridge benefit tax for the year is:

A. P2,823 B. P941 C. P 0 D. no answer

Q19. Referring to the data in no.16, the corporation can claim an amount related to the fringe benefits
as allowed deduction from the gross income. Which is said amount?
 A. P25,800 B. P28,623 C. P26,714 D. no answer

Q20. Which of the following amount represents the fringe benefit tax due on the P12,000 monetary
value of a housing benefit given by the employer in the current year, to his general manager, where
such dwelling unit is located within the premises of the company-employer?

A. P 0 B. P5,647 C. P3,840 D. No answer