Exclusion Income Subject to normal

3. s subject to FT
FT rate FT
income tax
Dividend income for DC 55,000
Interest(deposit) - Phils 89,000 20% 17,800
SSS death benefit 120,000
Prizes from winnings 90,000 20% 18,000
Proceeds of life
2,000,000
insurance(deceased)
Compensation income 250,000 550,000
13th month pay and other benefits 90,000 2,000
Compensation for actual damages 100,000
TOTAL 2,615,000 35,800 552,000

4.
Sales 5,800,000
Less: Sales returns and allowances 150,000 5,650,000
Cost of Goods Sold
Merchandise inventory, January 1, 2020 1,800,000
Purchases 4,100,000
Freight-in 80,000
Purchase returns and allowances (110,000) 4,070,000
Cost of goods available for sale 5,870,000
Merchandise inventory, Dec. 31, 2020 (1,200,000) 4,670,000
Less: Freight-out 90,000
Taxable Income P 890,000

5.
1. Rent (2,000 x 12) 24,000
Leasehold improvement 1,000,000
 Reportable income 1,024,000

2. Rent (2,000 x 12) 24,000

Leasehold improvement:
Cost 1,000,000
Accum. Dep’n (1,000,000/20)x9 (450,000)
Book value, end of lease (550,000/9) 550,000 61,111
Reportable income 85,111

3. Amount already reported as income (61,111 x 1) 61,111

Given that the BIR did not act on the filed claim for refund, where if the two-year period is
about to lapse, the claimant may appeal to the Court of Tax Appeals without waiting of the
decision of BIR within the two-year period with its last day being April 10, 2022.