Solutions for Problem 1:

Resident Citizen:
a. Taxable net income
Gross business income, Philippines P1,000,000
Gross business income, USA 500,000
Business expenses, Philippines (700,000)
Business expenses, USA (430,000)
Compensation income, Philippines 600,000
Dividend income from a foreign corporation 40,000
Interest income from bank deposits abroad 30,000
Royalty income from composition 25,000
Raffle draw winnings 10,000
Taxable net Income 1,050,000

b. Income tax payable

First 800,000 P130,000
In excess of P800,00 (250, 000 x 30%) 75,000
Tax due P205, 000
Less: CWT on business income 125,000
Income tax payable 80,000

c. Total final taxes on passive income

Dividend income from a domestic corporation (10%) 5,000
Interest income from peso bank deposit- Philippines (20%) 4,000
Interest income from FCDS deposits (15%) 6,000
Royalty income from composition (10%) 2,500
PCSO winnings (20%) 40,000
Total final taxes on passive income P57,500

d. Total income tax expense

Income tax payable P80,000
Total final taxes on passive income 57,500
CWT on business income 125,000
Total income tax payable P262,500
Non-resident Citizen:
a. Taxable net income
Gross business income, Philippines P1,000,000
Business expenses, Philippines (700,000)
Compensation income, Philippines 600,000
Royalty income from composition 25,000
Raffle draw winnings 10,000
Taxable net income P910,000

b. Income tax payable

First 800,000 P130,000
In excess of P800,00 (110, 000 x 30%) 33,000
Tax due P163,000
Less: CWT on business income 125,000
Income tax payable P38,000

c. Total final taxes on passive income

Dividend income from a domestic corporation (10%) P5,000
Interest income from peso bank deposit- Philippines (20%) 4,000
Royalty income from composition (10%) 2,500
PCSO winnings (20%) 40,000
Total final taxes on passive income 51,500

d. Total income tax expense

Net Income tax payable P38,000
Total final taxes on passive income 51,500
CWT on business income 125,000
Total income tax expense P214,500
Resident Alien
a. Taxable net income
Gross business income, Philippines P1,000,000
Business expenses, Philippines (700,000)
Compensation income, Philippines 600,000
Dividend income from a foreign corporation 40,000
Interest income from bank deposits abroad 30,000
Royalty income from composition 25,000
Raffle draw winnings 10,000
Taxable net income P1,005,000

b. Income tax payable

First 800,000 P130,000
In excess of P800,000 (205,000 x 30%) 61,500
Tax due P191,500
Less: CWT on business income 125,000
Income tax payable P66,500

c. Total final taxes on passive income

Dividend income from a domestic corporation (50,000 x 10%) 5,000
Interest income from peso bank deposit- Philippines (20,000 x 20%) 4,000
Interest income from FCDS deposits (40,000 x 15%) 6,000
Royalty income from composition (25,000 x 10%) 2,500
PCSO winnings (200,000 x 20%) 40,000
Total final taxes on passive income P57,500

d. Total income tax expense

Net Income tax payable P66,500
Total final taxes on passive income 57,500
CWT on business income 125,000
Total income tax expense P249,000
Non-resident Alien
a. Taxable net income
Gross business income, Philippines P1,000,000
Business expenses, Philippines (700,000)
Compensation income, Philippines 600,000
Raffle draw winnings 10,000
Taxable net income P910,000

b. Income tax payable

c. Total final taxes on passive income
d. Total income tax expense