ee Chapter Ecvercises ~ Iadevideat 2-13. The taxpayer is a resident alien: Selling price on a direct sale to buyer of shares 310,000 of stock of a domestic corporation Cost of the shares sold : 150,000 Required: Compute the capital gains tax. 2-14. The taxpayer is a nonresident alien engaged in trade or business: Selling price on sale of shares of stock of a 550,000 domestic corporation through the local stock exchange : Cost of the shares sold 300,000 Required: Compute the capital gains tax. TRUE OR FALSE 2 . Individual taxpayers are natural persons with income derived within the territorial jurisdiction of a taxing authority . Income earned outside the Philippines by OFWs are tax exempt because they are considered nonresident citizen. The intention with regard to the length and nature of stay of an alien determines whether he is a resident or nonresident. |. A foreigner who has acquired residency in the Philippines shall only become a nonresident when he actually departs with the intention of abandoning his residency in the Philippines. . An alien individual, whether a resident or not of the Philippines, is taxable only on income derived from sources within the Philippines. A foreigner who shall live in the Philippines with no definite intention as to his stay is a nonresident alien. Nonresident alien who shall come to the Philippines and stay herein for an aggregate period of more than 180 days during any calendar year is subject to the rule on reciprocity under the Tax Code with respect to their allowed personal exemption. . An alien individual is deemed doing business in the Philippines if he shall come to the Philippines and stay herein for an aggregate period of more than 180 days during the calendar year. Generally, a nonresident alien not engaged in trade or business is subject to 25% creditable withholding tax on his gross income in the Philippines. 137Chatter Exursses Kedah 7 eee te SB gas ix based on the highs ee tt tints emt wn Sarai saree acre oto Suet ‘ordinary asset to the government is Seren cetera anton = TIPLE CHOICE wt cored eM 1. Unde Secten | At Vole PrigpeCorstiton. a Fpno cian wots " Soe mote win Fate andoc theta ipo chiens 1 Bomisoe Jawa 17 HB6tFupre moder uno eects Plganecizeonp eon eachagthe age of 0%. oF it, Rogued Pinon etzerep ator ntraee}n fcrorsanoe wih Prlppae ws fa Landon land tl only lara only ¢. Wand th Use the foloing dat forthe not Fe (8) questions: ‘taxpayer, named wthout qualified dependent child, had the folowing ata for tna yeat 2021 Seacam use” "een Coes tiseme Sees Ebeune Joe sno 2 betas escent cian mai istaaie incomes crams Cerone ceaoo season 3. oo tapayr ancien ccen mara istoane neon seas rondo trate cease 4 lhe arrester med tis tae wean f cpa teas Fron 138 Caster Exercises - tedivideahe 4 5. tf tho taxpayer ta noncostent aon engago in ado oF business In tho Pnippins, mand and Ns county grants P40,000 a persona! temlion for morte dhl. taal ncome Is "Ps, 000 P700.000 260,000 4 Peo 000 6, fhe taxpayer 1s a non-resident ation not engage in business In the Phiippines, mamaed and his country grants 40,000 aa a personal ‘exemption for marned indwiduats, his taxable incomes ‘3 P800,000 , P960,000 , P100,000 «.P350,000, 7. Mr. George Hames is a Syrian and a resident of Damascus, Sytia. He requested you to file his Philippine income tax return for 2021. The following information were forwarded to you! ‘Gross wn Iinerest ncome from BPI bank deposits 3,000,000, DDndona income tom domestic corporations 500,600 Less: Expenses 900,000) Netincome i the Philippines 3,200,000 ‘Ad et ncome in Syria (Peso equvalon) 8.000.000 _ Tota et neome —Pe.200,000- Taxable income you wil reports: ‘a P3,090.000 c P3.500.000 8 P3,200,000, PO ch of ne folowng received by an individual taxpayer isnot subject to inal tax but subject to tax under Section 28 A of tha Tax Coda? ‘Cash divdend from damestc corporation 0 Property aiviend ftom regional operating headquarters of ‘multinationals & Share in the distnbutive net income aller tax of taxable partnership in the Phiippines, Cash dividend trom 9 foreign corporation with Philippine branch 8. Which ofthe folowing is an income subject to the basi tax? '. Dividends received from domestic corporation b. Pizas from USA lotto Interest income from BDO Shave inthe net income of ordinary partnershiplite Exes = Iai ft negara ant - 2 eee rade or business on ther net ° entae er 1. Staten: Passe names are sbjetto Separate anc al ax 1 rt er inthe computation of incase nuded inthe come Saterat 2 ase pean obusiessPIes80Nl com, 2 Semone ree & Sateen stue bu sterent 2 false © Seren ste butetatoment 2s rue & Slements1and2are ve a edceyet eames 2 Yes Yes . No No € Yes No ‘ No Yes 13, Bay, apo overseas contact worker and his spouse a rasint ofthe Philipines, have rt US dolar account at PS Bank, Mak Ther gross erst earings in 202 frm the bank deposi around {0 US'4.000, Wich ofthe folowing slaement is correct? 4 Theileret income shal be Weald as tax exer acause Bays nonresident zen, 5. The nest nome shal be taxable in ful because Binoy and tis spouse are both ipo cizens, Fy percent (50%) of tints income shall be treated 0, fiamol late ches ity percent (50%) shall be sub! o yadiaed aes iy Tote ee )Cl the interest income shall be treated 3 xem whl the chery percent (50%) shall be subject 0 # fawning ae Pee (0%) shall be subi © 140 2a Chester Eerie = Indiieale 14, Cash andlor property dividends shall be subject to 10% final withholding taxi actualy or constructively rocoived from 1. Domestic companies or from joint stock companies. I Insurance oF mutual und companies {iL Regional operating headquarters of multinationals V.__ Philippine branch ofa foreign eaxporatin, ‘a lonly Wonly b. Landi only <1 land tl only 15. Aresident citizen received a prize of P50,000. Which ofthe following satemens i corect in connection wit the imposition offal tx on the prize? 2. The first P10,000 is subject to Section 24(A), the remaining 30,000 is subject to 20% final tax. , The fist P10,000 is exemt from ta, the remaining P30,000 is, ‘subject to 20% final tax, © The whole amount shall be subject io 20% final tax. 4. The whole amount shall be subject to 25% final tax. 16. Which ofthe following passive income is exemp from tax when ‘received by resident ctizen and non-resident aliens engaged in trade ‘or business in the Philippines, but subject to 25% final tax when received by nonresident aliens not engaged in wade or business? ‘3. Prizes of more than P10,000, . Interest income fom tong-ierm deposit of instrument evidenced by certificates prescribed by the Bangko Sentral ng Pipioas, ‘c. Yield or any other monetary benefit from trust funds and similar arrangements, 4. Other winnings. 17. A resident citizen received a raffle prize of P40,000 from NBA while walching a basketball game between LA Lakers and Boston Celts in LA alifrnia, USA. Which ofthe folowing statements is corect? 2. The whole amount of P40,000 is part of his taxable income . The frst 10,000 is part of his taxable income while the remaining 'P30,000is subject to 20% fina tax ‘¢. The whole amount of P40,000 shall be subject to 20% final tax 4. The first 10,000 shall be exempt from tax while the remaining 30,000 is subject to 20% final tax 141_ acs ~ Hedivideg 7 “apie in the Prisppines? yen of ne totorg P08 S PAE aed By a nonresident agg ss mmganetnet Pamper anton ated eens resident ctizen corporation aproad by a.n0n# ee reat wehng RIT american 0 fsidng teste ng atte bene oS npn Bacio. ares etre" rome alta P1.2se Process Chester Fee trom conyreh of tax 12, er a stesso 8h 2 19, How much ste ata fal taxon Peo incon 2S Pua 4.3250 seggegm S ree AG : th eee iemectysn Seceecey maa mace i Dridendincome rom a domeste corporation 144,000 21. tftaxpayeis a resident ae, the nal taxon the above passive ‘income would amounts 3. PaLi98 «. PB4,000, be. Pas'S00 4. P4000 22 taxpayer is 2 nonvesidert allen engaged in business, the final tax ‘on the above passive income would amount to 2. Pat.i9¢ . P4000 ». Pas's00 4. P84\000 INS TAX.— SHARES AND REAL Pi 25 Sltien There's copa gan axon shares otek onli he Shares ave those of @ domeste corporation held as capital asset and talented nae shexhare rer 2. Th pil gana nc is aidan thirty days from the date of sale. Snsnares of slookis pad wih 142 a Chater Evers Statements 1 and 2 ae false Statomont 1 s true but statomont 2s false ‘Statoment 1 false but statoment 2 is tue Statements 1 and 2 ore tue 24, Which of the following Iransactions is exompt from capital gains tax? (Caso 1 - Sale of the principal residence of the taxpayer whare the tenlve proceeds is used to purchase a vacation lat in Tagaytay. Caso 2 - Sale of a beach lot of the taxpayer where the entire proceeds is used to construct his principal reskdenc Caso 3 - The sale of the principal residence of the taxpayer ‘avaling tax exemption for the second time in ten (10) years to ‘purchase another prinipal residence. 7 A 8 CO, ase? Yes Yes No No Case2 Yes Yes No No Gase2___Yes_No__Yes - No Use th foloming data forthe nex! two (2) questions: Pedro inhented from ns parents a large parcel of undeveloped land acqute'! by them years ago wih total cost of P2,500,000. Pedro now sold the lan for P25 000,000, 25, How much of the gain should Pedro report in his income tax return for the year? 9 None, because the property is a capital asset and the ‘wansaction's subject to capital gains tax, nat basic income tax. 'b 22,500,000 because although the propery is a capital asset and the transaction is subject to capital gains tax, such tax is Stil considered income tax. Thus, the gain shall also be reported in Padro's income tax return, Pedio has the option to report an income of P22,500,000 subject 10 basic income tax or exclude the income from his income tax relurn and pay 6% capital gains tax. 4. Any of the choices above 26, Assume that the parcel of and inherted by Pedro was already a well ‘developed real estate subdivision divided into small ols being sold on installment basis. He sold the entre property for P25,000,000. How ‘much ofthe gain, if any, should Pedro report in his income tax return for the year? ‘a, None, because the propery is a capital asset and the ‘transaction is subject to capital gain tax, not basic Income tax. 143Chater Eerivs - Iedividale © gnc Se ie Ped ras the opt yt an income of P22.509, saaennm man sae earn na pay cola Ons ax .maniees su INGIPAL RESIDE f principal residence ang: a wid ernest Foe, su once matey . ‘within 18 calendar months from the date of disposition. ” ot disposed shal be cattied over to the new’ prinogal fe Commis tree toby aa 28. Juan is a resident of QC. He sold his family home for P4,000,000 ‘which was previous acquired for F2,090,000. Juan complied al IR requirements to avail of tax exemption and spent P2,500,000 in ‘acquiring new family Nome. How much isthe capilal gains tax to be aid by Juan? 2. Po «. 150,000 3 Peo000 6. P240,000 fotosing daa for tions Cts asat-empiyed and professional accounianl. He provided the flowing information or 2021 taxable year: ‘Gioss sales 1,850,000 Costof sales 500,000 Business expenses 425,000 Rental income (ret) 308,750 Phiipine charty sweepstakes winnings 500,000 Royaly income - books 120,000 te ray come Phipps 60,000 vend income ~ domes eorporatons 40,000 Interestincare, 200 OG 100,000 Interest income received from a depository bank 50,000 us 2. 34 Chaser Eaevses ~ hediideal under FC0S, Pipines CCrecitabe withholding tax from business income 65.000 Quarterly tax payments 82,500 How much isthe income tax payabte of Cift? ‘a, P9500 ©. P57.500 b. P10.500 . P205,000 How much i the income tax pa taxed at 8% income tax rate? a, (P9,500) b. P10,500 yable of Cif assuming he opted to be «©. P57.500 . P205,000 ils deriving compensation and business income. He provided the following information for 2021 taxable year Gross compensation income 600,000 Gross sales 1,650,000 Cost of sales ‘500,000 Business expenses 425,000 Renat income (net) 308.750 hippie chanty sweepstakes winnings 500,000 Royalty income - books 420.000 ther royaty income - Philippines 60,000 Divideng income ~ domestic corporations. 40.000 Interast income, 800 QC 100:000 Interest income received from a depositary 50.000 ‘bank under FDS, Phiippines Creaiiable withholding tax rom business 65,000 ‘coma ‘Quarterly tax payments 2.500 How much isthe income tax payable of Cif assuming he opted to be taxed at BY income tax rate? ‘a. P89,500 . P90;500 57.500 4. P205,600 MMichao! Cabaries, single, has the folowing income and expenses for the year 2021, He is also providing supporting to his eight-year-old ilegtimate chic. Professional Income, net of —P60,000 P540,000 ‘withholding tax, Rental income (net) 47,500 Rewards as BIR informer ‘30,000 Wagering gains 50,000 145ljater Exerives ~ hivide 7 f clients rom suppers ceunasnnstrnssteed iets Seeseropee Cae ant ferret Ccemput the amount fis exe ecm a. P&500 “ i ln ee en nie hes rt us ee elie mare, wh 2 that ctor yo 202 aes Pence . oe hin andctrares Pines Gast oleaes Poses Srsssaes Uae Sees ietans an alvaras, ine Satolsas vane Beas penn Pugs Busnes geoneUore feet ene pl bank eno 0 Marna ies ocone Us eta epost, BOO andaljora {Scien sale retental aus rl (eng pce. 0060: FA, ro oe P0000) Gn ton se fattest tested and raed te zl ssc exhange sng pce PLO) Centon scl hrs cf kl aed the oa Soxewiane 433. How muh she fo. al tax on passve income? 2.PI4000 Pano brn Pinst0 ‘4 Hom much he capi gas tx due? 2. P310000 "8 Pi8,000 b Poo00 4. pazzson 35. How muchs te exer @ Parenouo"e Peacno00 ». Pé.2e0.000 4. P4.200,000 46 40,009 32.000 75,000 325,000 724,000 4,000 15,000 income subject to basi tax for 5,000,000 ‘500,000 1.500.000 3.000.000, 200,000, 800,000, 00,000, Chaser Beers - Iedivideale FILING OF INCOME TAX RETURNS 36. Which ofthe following income is required to be fled in a quarterly income tax return? ‘2. Compensation income . Passive income Business income 4. Capital gains 27. The fllovng ae the requirement or substituted fing of income tax ret, except 3 He had one employer eniy 5. Hisineome was purely compensation income Income tax withheld by he employers earest. a. He had consecutiv fle his income tax relum forthe past five years, 38, Statomont f: If an employee had multiple employers within the year, ‘an income tax return must be fled a the end of the year, Statement 2: an employee had three employers, on succession, for ‘each ofthe past three years, substituted fling of tax retum is not alowed, ‘Statements 1 and 2 are false ‘Statement| is true but statement 2s false ‘Statement | is false but statement 2s tue Statements 1 and 2 are rue apse 38, Who ofthe folowing individual taxpayers may avai of substituted fling of income Tax Return (TTR? % John Bo: + Deriving compensation income from ABC Company, his nly employer for the taxable year. The correct amount of tax was withheld by ABC Company He also detives interest income from his peso bark Jeposit in BPI and the sale of his shares in DEF. Corporation (a closely-heid domestic corporation) to Brian resulted to again of P100,000. “ar4 Ss 42. . 15 statement. Taxable incor - Inivideale Chyler ensation income from xyz Leomar Jy com + Deriving Pare iy employer for the taxable year. Corporation + The correct amount + Leomar's spouse is en YF tax was withheld by XYZ gaged in business A 8. ©. or Yes ves NO lo Rianne Yes _No “Leomar___Yes_No_T88_—“"— me from self-employment (business and sa eres roporied on a quarterly and annual basis, escent cree quarerly income tax retum shal be filed and! the tax paid as follows: }*Q = not later than April 15, 2" Q— not later than August 15, 3° Q~ nat later than September 15. ‘a. Statements 1 and 2arefalse b. Statement 1 is true but statement 2 is false ©. Statement 1 is false but statement 2 is true d. Statements 1 and 2 are true Pedro's income tax due for the year amounted to P80.000, He may elect to pay the tax due on installment as follows: ‘a. In two equal installments b. installment is payable upon filing the annual income tax return. c. 2° installment is payable on or before October 15 following the close of the calendar year. d. Allof the above + statement: If any installment payment of income tax is not paid on or before the dale fixed for its payment, the whole amount of the unpaid tax becomes due and payable, together with the delinquency penalties to be reckoned from on the original date when the tax is required to be paid. : 4 statement: Installment payment of income is not allowed to sel employed andlor professional who are availing the 8% income tax rat ‘a. Stalements 1 and 2 are false b. Statement 1 is true but statement 2 is false ¢, Statement 1 is false but statement 2 is true 4. Statements 1 and 2 are true 148