Case 1

An individual taxpayer provided the following information for the year 2021:

Gross business income, Philippines P 5,000,000

Gross business income, Canada 2,000,000
Gross business income, Singapore 1,000,000
Business expense, Philippines 3,000,000
Business expense, Canada 1,000,000
Business expense, Singapore 500,000

1. What is the taxable income assuming the taxpayers is:

a. A resident citizen

Gross business income, Philippines P 5,000,000

Gross business income, Canada 2,000,000
Gross business income, Singapore 1,000,000
Business expense, Philippines (3,000,000)
Business expense, Canada (1,000,000)
Business expense, Singapore (500,000)
Taxable Income P 3,500,000

b. A non-resident citizen
Gross business income, Philippines P 5,000,000
Business expense, Philippines (3,000,000)
Taxable Income P 2,000,000

c. A resident alien

Gross business income, Philippines P 5,000,000

Business expense, Philippines (3,000,000)
Taxable Income P 2,000,000

d. A non-resident alien – engaged in trade or business

Gross business income, Philippines P 5,000,000
Business expense, Philippines (3,000,000)
Taxable Income P 2,000,000

e. A non-resident alien – not engaged in trade or business

Taxable Income P 5,000,000

2. What is the income tax payable for each classification?

Resident Citizen P970,000 (400,000+480,000)
Non-resident citizen P490,000 (130,000+360,000)
Resident alien P490,000 (130,000+360,000)
Non-resident alien – engaged in trade or business P490,000 (130,000+360,000)
Non-resident alien – not engaged in trade or business P1,450,000

Case 2

How much is the income tax due (payable) of a Self-employed/Professional (SEP) assuming:

a. The gross sales/receipts and other non-operating income was P240,000. - 0

b. The gross sales was P2,800,000; cost of sales was P1,500,000; and operating expenses were
P750,000.- 67, 500
2,800,000
(1,500,000)
( 750,000)
550,000
400,000
150,000
25%
37,500
30,000
67,500

c. Using the same information in letter “b” but the SEP availed of the 8% tax under the TRAIN
Law. – 204,000
2,800,000
( 250,000)
2,550,000
8%
204,000

Case 3

a. How much is the income tax due (payable) of a SEP if the gross sales, cost of sales, and
operating expenses were P5,000,000, P2,250,000, and P1,250,000, respectively?

XGross sales 5,000,000.00

Cost of sales (2,250,000.00)
Operating expenses (1,250,000.00)
Net taxable income 1,500,000.00

Tax on first 800,000 income 130,000.00

Excess of 800,000 income
 (700,000*30%) 210,000.00
Income tax due/payable 340,000.00

b. Using the information in letter “a”, may the taxpayer choose the 8% tax? Why?
No, the taxpayer is not allowed to choose the 8% tax because his gross sales for the
year exceeded the revised VAT threshold of P3,000,000.

Case 4

Assume the following data for the year for a mixed income earner: Compensation income –
P900,000; Gross sales – P2,800,000; Cost of sales – P1,500,000; and Operating expenses –
P750,000.

a. How much is the income tax due?

Taxable Compensation Income P900,000
Taxable Income from Business
Gross Sales 2,800,000
Cost of Sales (1,500,000)
Gross Income 1,300,000
Operating expenses (750,000)
Taxable Income 550,000
Total Taxable Income 1,450,000

Tax Due
On P800,000 P130,000
Excess 650,000*30%= 195,000
Total Tax due= 325,000

b. Assume that the taxpayer is a SEP and opted to avail the 8% tax under the TRAIN Law,
how much is the income tax due?
Tax Due on Compensation Income
On 800,000 P130,000
On excess 100,000*.30= 30,000
Tax Due on Compensation Income 160,000

Tax Due on business income

Gross sales – P2,800,000-250,000=2,550,000
Multiplied by 8%
Tax Due on Business Income 224,000
Total Tax due= P364,000

Case 5

Assume the following data for the year for a mixed income earner: Compensation income –
P900,000; Gross sales – P5,000,000; Cost of sales – P2,250,000; and Operating expenses –
P1,250,000.

a. How much is the income tax due?- 618,000

Compensation Income 9,000,000

Gross Sales 5,000,000
Cost of Sales (2,250,000)
Operating Expense (1,250,000) 1,500,000
2,400,000
Less: Lower Tax Bracket 2,000,000
400,000
32%
128,000
490,000
618,000
Case 6

A resident taxpayer provided the following information for the current taxable year:

Gross business income, Philippines P 2,000,000

Gross business income, Canada 3,000,000
Business expenses, Philippines 1,400,000
Business expenses, Canada 2,050,000
Interest income – Philippine Bank 100,000
Interest income – Canadian Bank 50,000
Dividend income from a domestic corporation 125,000
Dividend income – resident foreign corporation 75,000
Dividend income – non-resident foreign corporation 102,000
Interest income received from a depository bank under
FCDS, Philippines 50,000
Philippine lotto winnings 10,000
PCSO winnings 500,000
Singapore sweepstakes winnings 200,000
Other winnings – Philippines 50,000
Prizes – Robinsons Manila 8,000
Prizes – SM Manila 20,000
Prizes – SM “Shanghai”, China 30,000
 a. How much is the income tax due?
a. Gross business income, Philippines 2,000,000.00
Gross business income, Canada 3,000,000.00
Business expenses, Philippines (1,400,000.00)
Business expenses, Canada (2,050,000.00)
Interest income – Canadian Bank 50,000.00
Dividend income – resident foreign
corporation 75,000.00
102,000.0
Dividend income – non-resident foreign corporation 0
Singapore sweepstakes winnings 200,000.00
Prizes – Robinsons Manila 8,000.00
Prizes – SM “Shanghai”, China 30,000.00
Gain on sale of real property
abroad 300,000.00
Taxable income 2,315,000.00

Note: Taxable income should 2,015,000

b. How much is the total amount of final taxes on passive income?

20,000.0
Interest income – Philippine Bank (20%) 0
Dividend income from a domestic corporation (10%) 12,500.00
Interest income received from a depository bank under
FCDS, Philippines
(15%) 7,500.00
Other winnings – Philippines (50,000*20%) 10,000.00
Prizes – SM Manila
(20,000*20%) 4,000.00
Total final tax on passive
income 154,000.00

Case 7

A resident citizen taxpayer realized the following gains from sale of assets:

Capital gains on sale of shares of a domestic corporation P 110,000

(sold directly to buyer, SP – 1,110,000; cost – P1,000,000)
Gain on sale of shares of a domestic corporation 25,000
(sold in local stock exchange; SP – 115,000; cost – P90,000)
Gain on sale of real property classified as capital asset in 500,000
the Philippines (SP – 2,000,000; FMV – P3,000,000;
Acquisition cost when acquired three years ago – P1,500,000)
Gain on sale of real property abroad 300,000
(SP – 3,000,000; FMV – 2,500,000; Acquisition cost when
acquired three years ago – P2,700,000)

a. How much is the total capital gains tax?

Capital gains on sale of shares of a domestic corporation
110,000*15%=16,500

Gain on sale of real property classified as capital asset in the Philippines

3,000,000*6%=180,000

Total capital gains tax 196,500

b. How much is the percentage tax paid?

Gross Selling Price * 6/10 of 1%
115,000*0.006= 690

Note: 25,000* 0.006

Case 8

A resident citizen sold his residential house and lot (principal residence) in the Philippines with
the following additional data: Selling price – P4,000,000; Fair market value – P6,000,000; Zonal
value – P5,000,000; and Expenses on the sale – P125,000.

a. Assuming the taxpayer bought a new principal residence for P4,000,000, how much is
the capital gains tax? – 0 or None
b. Assuming the taxpayer bought a new principal residence for P8,000,000, how much is
the capital gains tax? – 0 or None
c. Assuming the taxpayer bought a new principal residence for P2,000,000, how much is
the capital gains tax? – 180,000
(2,000,000/4,000,000) * 6,000,000= 3,000,000
6%
180,000
Case 9

A resident citizen (an employee) provided the following data for the taxable year:

Compensation income (gross of deductions below) P 450,000

Deductions made by the employer:
 SSS premium contributions 6,000
PhilHealth contributions 8,400
Pag-IBIG contributions 2,400
Union dues 1,200
Income tax withheld 35,000

a. How much is the income tax payable of the taxpayer, if any?

Compensation
income 450,000.00
Less: Income exempt from tax
SSS premium contributions (6,000.00)
PhilHealth contributions (8,400.00)
Pag-IBIG
contributions (2,400.00)
Union dues (1,200.00)
Taxable income 432,000.00

Tax due
Tax on first 400,000 30,000.00
Excess of
32,000*25% 8,000.00
Total tax due 38,000.00
(35,000.00
Less: Tax withheld by the employer )
Income tax payable 3,000.00

Case 10

A resident citizen provided the following information:

Compensation income P 1,000,000

Gross business income, Philippines 2,000,000
Gross business income, Canada 3,000,000
Business expenses, Philippines 1,400,000
Business expenses, Canada 2,050,000
Income tax withheld by the taxpayer’s employer on
His compensation income 150,000
Income tax withheld by “certain” payors 100,000
Income tax payments to the BIR for the first thee
Quarters of the year 125,000
 a. How much is the income tax payable of the taxpayer at year-end, if any?

Compensation income P 1,000,000

Gross business income, Philippines 2,000,000
Gross business income, Canada 3,000,000
Business expenses, Philippines (1,400,000)
Business expenses, Canada (2,050,000)
Taxable Income P 2,550,000

Tax Due
On 2,000,000 490,000
Excess of 2,000,000(550,000*32%) 176,000
Tax Due 666,000
Less:
Income tax withheld by the taxpayer’s employer on
His compensation income (150,000) Form 2316
Income tax withheld by “certain” payors (100,000) Form 2307
Income tax payments to the BIR for the first three
Quarters of the year (125,000) Form1701Q
Income tax payable P 291,000

Case 11

The following cumulative balances on income and expenses in 2020 of a taxpayer were given to
you:

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter/Year

Gross sales 1,200,000 2,100,000 3,000,000 3,700,000
Cost of sales 700,000 1,200,000 1,800,000 2,200,000
Business expenses 200,000 325,000 550,000 700,000
Income taxes paid on:
Interest income
Sales of land 1,560 3,040 4,520 5,960
24,000 24,000 24,000 24,000
Dividend received from
domestic corp 10,000 10,000 20,000 20,000
Interest income from:
BPI
UCPB 2,000 4,000 6,000 8,000
MetroBank 800 1,200 1,600 1,800
5,000 10,000 15,000 20,000
Capital gains tax 80,000 80,000 80,000 80,000

Selling price of property sold: P400,000; Cost – P320,000

1. Using the above information, how much is the

a. Income tax payable for the first quarter- 10,000
b. Income tax payable for the second quarter- 63,750
c. Income tax payable for the third quarter- 28,750
d. Income tax payable for the fourth quarter- 101, 250
e. Final tax on passive income- 7,960
f. Capital gains tax- 24,000
(400,000 * 6%= 24,000)

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

1,200,000 2,100,000 3,000,000 3,700,000

(700,000) (1,200,000) (1,800,000) (2,200,000)
(200,000) (325,000) (550,000) (700,000)
Taxable Income 300,000 575,000 650,000 800,000

Income Tax 10,000 73,750 92,500 130,000

Due
(10,000) (63,750)+ (18,750)+(63,750)+(10,000
(10,000) )
Income Tax 10,000 63,750 28,750 101,250
Payable
Note: should deduct all payables from previous quarter

Dividend Income 20,000 10% 2,000

Interest Income 20%
BPI 8,000 1,600
UCPB 1,800 360
Metro Bank 20,000 4,000
7,960

Case 12

Spouses Mr. A and Mrs. A provided the following information:

 Mr. A Mrs. A Mr. & Mrs. A
Gross income – practice of profession 800,000
Gross compensation income 400,000
Dividend income:
From domestic corporation 5,000 5,000
From resident corporation 12,000
Interest on notes receivable 4,000
Interest on Philippine bank deposit 2,000 3,000 6,000
Royalty income 2,000
Miscellaneous income 10,000 60,000
Capital gain on sale of shares of a
domestic corporation sold directly to
buyer 80,000
Capital loss on sale of shares of a
domestic corporation sold directly to a
buyer (20,000)
Capital gain on sale of land: FMV –
P12M; SP – P10M; Cost – P8M 2,000,000
Expenses, business/profession 425,000 20,000

From the above information, how much is the:

a. Total capital gain taxes paid by the spouses

Capital gain – Domestic Corp. (80,000*15%) 12,000.00

720,000.0
Capital gain on sale of land (12M*6%) 0
732,000.0
Total capital gains 0

b. Total final taxes paid on passive income by the spouses

XDividend income – Domestic Corp. (10,000*10%) 1,000.00
Interest on PH bank deposit (11,000*20%) 2,200.00
Royalty income (2,000*20%) 400.00
Total final taxes on passive income 3,600.00

c. Taxable income of Mr. AX

Gross income – practice of profession 800,000.00

Dividend income – Resident Corp. (12,000/2) 6,000.00
Interest on notes receivable (4,000/2) 2,000.00
Miscellaneous income (60,000/2) 30,000.00
Expenses – practice of profession (425,000.00)
Expenses – miscellaneous (20,000/2) (10,000.00)
Taxable income – Mr. A 403,000.00

d. Taxable income of Mrs. A

Gross compensation income 400,000.00

Dividend income – Resident Corp. (12,000/2) 6,000.00
Interest on notes receivable (4,000/2) 2,000.00
Miscellaneous income (60,000/2) + 10,000 40,000.00
Expenses – miscellaneous (20,000/2) (10,000.00)
Taxable income – Mrs. A 438,000.00