Green - Correct

SOLVING
CJ
CJ, single had the following data for the taxable year 2019

Gross business income, Philippines, net of CWT P 1,000,000

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 domestic Corp. 50,000
Dividend from a resident foreign corp. 40,000
Interest Income from peso bank deposit 20,000
Interest income from bank deposits abroad 30,000
Interest income from FCDS Deposits 40,000
Royalty income from composition 25,000
Raffle draw prizes 10,000
PCSO winnings 200,000
Creditable withholding tax on business income 125,000

Requirements:
1. Determine the following assuming the taxpayer is a resident citizen.
A. Income tax payable = 117,500
B. total final taxes on passive income = 57,500
C. Total income tax expenses (on all income received) = 300,000

2. Determine the following assuming the taxpayer is a nonresident citizen

A. Income tax payable = 87,500
B. Total final taxes on passive income = 51,500
C. Total Income tax expenses (on all income received) = 264,000

3. Determine the final tax on passive income assuming taxpayer is

A. Resident alien = 57,500
B. Nonresident Alien ETRB = 16,500
 Green - Correct

4. Determine the total income taxes of the taxpayer assuming the taxpayer is a
NRA-NETB (ignore business income, business expenses, and creditable withholding
taxes on business income from the Philippines) = 236,250

JOHN
John is a self employed and professional accountant. He provided the following
information for 2021 taxable year

Gross Sales P1,550,000

Cost of Sales 565,000
Business Expenses 335,000
Rental Income (NET) 332,500
Philippine charity sweepstakes winnings 450,000
Royalty income - books 210,000
Other royalty income 60,000
Dividend Income from domestic corp 40,000
Interest income, Metrobank - Makati 120,000
Interest income under FCDS 68,000
Total creditable withholding tax 80,000
Quarterly payments 83,600

Requirements:
A. Compute for the income tax payable of John. = 26,400
B. Compute for the total final tax of John. = 161,200
C. Assuming he opted to taxed at 8%, compute for the income tax payable of John.
= -31,600

PEDRO
Pedro is employed in an auditing firm and derives income from his small business. He
provided the following information for 2021 taxable year:

Gross compensation income P450,000

Gross sales 1,890,000
Cost of Sales 735,000
Business Expenses 428,000
 Green - Correct

Rental Income (net) 213,750

Philippine charity sweepstakes winnings 250,000
Prize from Globe Telecom 9,500
Royalty income - mining, net 35,000
Share in the net income of joint venture, net 59,238
Dividend income from domestic corporation 12,000
Annual interest income from long-term deposit, 9,000
Pre-terminated in 3rd year
Creditable withholding tax on business income 73,000
Quarterly payments 68,200

Requirements:

A. Compute for the income tax payable of Pedro

B. Compute for the total final tax of Pedro
C. Assuming he opted to taxed at 8%, compute for the income tax payable of Pedro.

Try KC (⅓) Wemby (⅔) Tal (⅓) Belle

Question A 172,250 161,000 161,000 161,000 161,000

Question B 67,612 67,612 67,612 65,024

Question C 60,010 60,010 71,260 60,010 60,010

Additional wrong (Question B)

- 69,772
 Green - Correct

ACCOUNTING PROFESSIONAL
A practicing professional, single, revealed the following data for taxable year 2021:

Additional data:
● In February, he bought a lot deemed as capital asset. The acquisition cost was 840,000.
He later sold the lot in December for 1,060,000.
● In September, he sold his 560 shares of stocks of Ayala Investment Corporation held by
him as capital asset, thru a local stock exchange. The cost was 36,900 and was sold at
154,000.
● In October, he sold 820,000 his house and lot located in Makati, held as capital asset
(not his principal residence). The fair market value on the date of sale was 950,000 and
acquisition cost was 475,000.

Requirements: (8/9)
1. Determine the following assuming the taxpayer is a resident citizen.
a) Income Tax Payable = 212,830
b) Total Final Taxes on Passive Income = 70,130
c) Total Capital Gains Tax = 120,600
2. Determine the following assuming the taxpayer is a nonresident citizen.
a) Income Tax Payable = 39,600
b) Total Final Taxes on Passive Income = 68,030
 Green - Correct

c) Total Capital Gains Tax = 120,600

3. Determine the final tax on passive income assuming taxpayer is:
a) Resident Alien = 70,130
b) Nonresident alien engaged in trade or business = 68,600
4. Determine the total income taxes of the taxpayer is a NRA-NETB (ignore
business expenses and creditable withholding taxes on business income from
the Philippines) =
143,850 (TRY: 264,450)

TRUE OR FALSE
A foreigner who shall live in the Philippines with no definite intention as to his stay is a
nonresident alien

- True
- False

An alien individual, whether a resident or not of the Philippines, is taxable only on the
income derived from sources within the Philippines.

- True
- False

Generally, a nonresident alien not engaged in trade or business is subject to 25%

creditable withholding tax on his gross income in the Philippines.

- True
- False

The amount of overtime pay, holiday pay, nightshift differential pay, and hazard pay shall
be subject to basic income tax provide that an employee receives basic pay more than
the statutory minimum wage.

- True
- False
 Green - Correct

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.

- True
- False

Some passive income are subject to separate and final tax rates.

- True
- False

A nonresident citizen is taxable only for the income within. Therefore, his interest
income is taxable expanded foreign currency deposit system transacted with an
offshore banking unit is taxable in the Philippines.

- True
- False

The intention with regards to the length and nature of stay of an alien determines
whether he is a resident or nonresident

- True
- False

Sale of real property classified as ordinary asset to the government is subject to 6%

capital gains tax or basic income tax, at the option of the taxpayer.

- True
- False

The provision of the Tax Code, as amended, which allows 8% income tax rate on gross
sales/receipts and other non-operating income in excess of P250,000 is available only
to purely self employed and/or professional

- True
- False
 Green - Correct

An employee simultaneously employed by multiple employers during the year must file
his individual tax return on or before April 15 next year following the end of the taxable
year.

- True
- False

All royalty income derived from sources outside of the Philippines received by Filipino
citizens are subject to basic tax.
- True
- False

All passive incomes are subject to separate and final tax rates.
- True
- False

All lotto/sweepstakes winnings amounting to P10,000 and below derived by resident

Filipino Citizen shall be exempt of final withholding tax under TRAIN Law and Create
Act.
- True
- False

A final tax of 10% shall be withheld if a nonresident citizen received his share in the
income of a taxable joint venture

- True
- False

An individual taxpayer is exempted from filing income tax return if his sole income has
been subject to final withholding tax.
- True
- False

Income earned outside the Philippines by OFWS are tax exempted because they are
considered nonresident citizens

- True
- False
 Green - Correct

Gain from sale of real property classified as capital asset sold to the government may
be taxed using the basic tax rate at the option of the purchasing government agency

- True
- False

All proceeds from the sale of real property classified as capital asset shall be subject to
capital gains tax of 6% considering the tax base which is higher amount among the fair
market value, zonal value, assess value or gross selling price.

- True
- False

Individuals are allowed to elect installment payment of their income taxed when the tax
due is P2,000 or more.
- True
- False

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.
- True
- False