CHAPTER EXERCISES

1. Determine the following incomes are subject to basic tax , fringe benefit tax or exempt from tax
by putting a check mark in the column provided below . If the value of the benefit is provided,
indicate the correct amount.

Amount Subject Subject Exempt

to FBT to Basic
Tax
1. Officer’s 120, 00 120,000
expense
account
not subject
to
liquidation.
2. Officer’s 80, 000 80,000
expense
account
subject to
liquidation.
3.Personal 50,000 50,000
expenses of
the
Company
officers paid
for or
Reimbursed
by the
Company-
employer.
4. Annual 5,000 5000/yr.
uniform
allowances
granted to an
executive.
5. Housing 360,000 360,000
benefits of
the

Philippine
Army
6. Housing 250,000 250,000
benefits of
officials of a
domestic
 corporation.
7. Housing 45,000 45,000
unit
furnished to
an employee,
where said
unit was
situated
inside or
adjacent to
the premises
of the
business
8. Monetized 15,000 15,000
unused
vacation
leave credits
not
exceeding 10
days
9. Household 60,000 60,000
personal
benefit
by an officer
of a domestic
corporation.
10. Annual 1,500 1,500
medical cash
allowance to
dependents

2. In 2018, Gracia Realty Corporation paid P325,000 to Wilderness Resort, representing

Vacation expenses of Mike, and executive of Garcia Company. Answer the following.

a. Is this taxable fringe benefit? Yes

b. How much is the tax base of the fringe benefit? P500,000
c. Should the taxable fringe benefit be included in the returnable income of Mike for the
Year? No, because Fringe Tax is included in the Final tax, hence nonreturnable
d. How much is the fringe benefit tax collected? P175,000
e. When is the fringe benefit tax remitted? On or before the 10th day of the month
following the calendar quarter in which the fringe benefit were granted to the
recipient.
f. Assuming Mike is a rank and file employee, is the fringe benefit subject to a fringe
Benefit tax? No, because it is subject to basic tax
 3. LJ is a resident citizen employed by Chris Sports, Incorporated. He received the following from
his employer during 2018:

Basic Compensation Income P900,000

13th Month pay. 75,000

3,000Monthly transportation allowance 36,000

Productivity incentive pay 10,000

Christmas Bonus 25,000

Uniform allowance 15,000

Actual medical allowance 10,000

Rice subsidy 24,000

Required: Determine lJ’s net income

Basic Compensation Income P900,000

P3,000 Monthly Transportation. 36,000

De Minimis Benefits Other Benefits

13th Month Pay 75,000

Productivity Incentives Pay 10,000

Christmas Bonus 5,000. 20,000

Uniform allowance. 6,000. 9,000

Actual Medical Allowance. 10,000

Rice Subsidy. 24,000

Total 104,000

Tax Exempt. . (90,000). 14,000

Taxable Income 950,000