VERITAS COLLEGE OF IROSIN

San Julian, Irosin, Sorsogon

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BACHELOR OF SCIENCE AND BUSINESS ADMINISTRATION (BSBA)
Income Taxation
AY: 2020-2021, First Semester

Subject: Income Taxation

MODULAR SYSTEM, Worksheet No. 3

1. Discuss the following:

1. Self-help income
2. Remuneratory donations
3. Refund of indirect tax
4. Gross income from farming
5. Leasehold improvements

2. Marlon, an architect owes Omar, a businessman P 1,000,000.00. The latter engaged the services
of the former to remodel his house. The value of the services rendered amounted to P
1,000,000.00. Subsequently, Omar cancelled the debt of Marlon.

6. Is the P 1,000,000.00 value of services taxable to Marlon? Explain.

7. Suppose, Omar condoned the debt of Marlon without requiring the latter to render any
service. Is the P 1,000,000.00 subject to income tax? Explain.

3. Indicate the amount of taxable income or deductible loss in each of the following independent
cases:

2017 Case 1 Case 2 Case 3

Income /loss before write-off 60,000.00 (30,000.00) 60,000.00
Less: Bad debts written off 10,000.00 10,000.00 100,000.00
Net income/net loss after bad debt 50,000.00 (40,000.00) (40,000.00)
2018
Bad debts recovered 10,000.00 10,000.00 100,000.00

8. What should be the issue in Case No. 1? Give the reason.

9. What should be the issue in Case No. 2? Give the reason.
10. What should be the issued in Case No. 3? Give the reason.

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