CHAPTER 6 – ACTIVITY / ASSIGNMENT

1. Susan Dimagiba presented to you the following income for the year:
Basic salary P 900,000
Withholding tax on basic salary 300,000
Directors Fee 200,000
Business income:
Retail business 250,000
Apartment rent (net) 190,000
Business expenses 125,000
Cash dividend:
From a domestic corporation 50,000
From a resident corporation 50,000
Stock dividend from a domestic corporation 25,000
Interest from savings deposit 20,000
Royalties from book publications 50,000
Prizes from contest won 50,000
PCSO winnings 50,000
13th month pay 100,000
Christmas bonus 30,000
Mid-year bonus 50,000
Damages received from injuries and sickness 85,000
Proceeds from the life insurance coverage of his
deceased father 300,000

Determine the following:

a. Gross income subject to graduated rate.

ANSWER: P 1,675,000
Solution:
Basic salary P 900,000
Directors Fee 200,000
Business income:
Retail business 250,000
Apartment rent (net) 190,000
Cash Dividend:
From a Resident Corporation 50,000
P1,590,000
13th month pay P 100,000
Christmas Bonus 25,000
Mid-year Bonus 50,000
P 175,000
(90,000)
85,000
P 85,000
P1,675,000

b. Total final taxes on passive income

ANSWER: P 34,000
Cash dividend:
From a domestic corporation (50,000*10%) P 5,000
Interest from savings deposit (20,000*20%) 4,000
Royalties from book publications (50,000*10%) 5,000
Prizes from contest won (50,000*20%) 10,000
PCSO winnings (50,000*20%) 10,000
Total final taxes on passive income P34,000

c. Total income not subject to tax

ANSWER: P 505,000

Stock dividend from a domestic corporation P 25,000

Christmas Bonus ( De minimis ) 5,000
13th month pay and other benefit P90,000 threshold 90,000
Damages received from injuries and sickness 85,000
Proceeds from the life insurance coverage of his 300,000
deceased father
Total income not subject to tax P 505,000

d. Income tax due

ANSWER:
P 126,500

Basic salary P 900,000

Directors Fee 200,000
Business income:
Retail business 250,000
Apartment rent (net) 190,000
Cash Dividend:
From a Resident Corporation 50,000
P1,590,000
Excess of 13th month pay and other benefit 85,000
P 90,000 threshold
Taxable income P1,675,000

Income tax due

In first P 800,000 P 130,000
In excess of 800,000 (875,000*30%) 262,500
P 392,500
Less: Withholding Salary (300,000)
P 92,500
Final taxes on Passive Income 34,000
Income Tax Due P 126,500