1. Dynasty Corp., just completed its 3rd year of operation.

It has the following financial information for

the taxable year 2015, its third year:

Philippines China

Gross income P1,250,000 P800,000

Deductions 945,000 540,000

a. Assuming that the taxpayer is a domestic corporation, what is the taxable income?

Gross Income

Philippines P1,250,000.0
0

China 800,000.00

P2,050,000.0
0

Less: Deduction

Philippines P945,000.00

China 540,000.00 1,485,000.00

Taxable Income P 565,000.00

b. What is the tax due?

Taxable Income P565,000.00

Multiply by: Tax Rate 30%

Tax Due P169,500.00

2. Regime Inc., is a trading company created under Philippine laws. For the quarter ending June 30,
2015, it has the following results of operation:

Gross Sales for the quarter P980,000

Cost of Sales for the quarter 492,800

Total deductions claimed for the quarter 315,000

Gross Sales for the 1st quarter 630,000

Cost of Sales for the 1st quarter 318,150

Total deductions claimed for the 1st quarter 215,932

Tax Payment for the 1st quarter 28,775

Creditable tax withheld 17,850

The company fails to file its 2nd quarter income tax return on the due date, August 29, 2015. It files its return on
September 6, 2015. Compromise penalty is P10,500.

a. Gross income this quarter

Gross Sales for the quarter P980,000.00

Less: Cost of Sales for the quarter 492,800.00

Gross Income for this quarter P487,200.00

b. Taxable income this quarter

Gross Income for this quarter P487,200.00

Less: Total deductions claimed for 315,000.00

the quarter

Taxable Income for this quarter P172,200.00

c. Gross income 1st quarter

Taxable Income for this quarter P172,200.00

Add: Gross Income for the 1st 630,000.00

Quarter

Less: Cost of Sales for the 1st 318,150.00

quarter

Gross Income 1st quarter P484,050.00

d. Total taxable income to date

Gross Income 1st quarter P484,050.00

Less: Total deductions claimed for 215,932.00

the 1st quarter

Total Taxable Income to date P268,118.00

e. Tax due

Tax Due (268,118.00 x 30%) P80,435.40

f. Tax payable

Tax Due P80,435.40

Less: Creditable P17,850.00
tax withheld
Tax Payment for 28,775.00 46,625.00
the 1st quarter
Tax Payable P33,810.40

g. Penalties

Penalties Surcharge (33,180.40 x 25%) P8,452.50

Interest (33,180.40 x 20% x 8/360)
150.27
Compromise penalty 10,500.00
Penalties P19,102,77

h. Total amount payable

Tax Payable P33,810.40

Add: Penalties 19,102,77
Total amount Payable P52,913.17

3. Empire Inc., a domestic corporation, started its operation in 2014, its record shows the following
cumulative balances for 2014.

1Q 2Q 3Q Year

Gross Income P1,920,000 P3,840,000 P5,760,000 P7,440,000

Business Expenses 1,440,000 2,880,000 4,080,000 5,040,000

Income Tax Wi 36,000 84,000 156,000 276,000

a. Taxable income for the first quarter

Gross Income this quarter P1,920,000.00

Less: Business Expenses 1,440,000.00

Taxable Income P 480,000.00

Income Tax Due (480,000.00 x 30%) 144,000.00

Less: Income Tax Withheld 36,000.00

Balance of Tax to be paid this quarter P108,000.00

b. Income tax for the second quarter

Gross Income this quarter P3,840,000.00

Add: Gross Income for 1st quarter 1,920,000.00

Gross Income for 1st and 2nd quarters P5,760,000.00

Less: Business Expenses

1st quarter P1,440,000.00

2nd quarter 2,880,000.00 4,320,000.00

Taxable Income P1,440,000.00

Income Tax Due (1,440,000.00 x 30%) 432,000.00

Less: Tax due for previous quarter 144,000.00

Balance of Tax to be paid this P288,000.00

quarter

c. Income tax for the third quarter

Gross Income this quarter P5,760,000.00

Add: Gross Income for 1st quarter 1,920,000.00

 Gross Income for 2nd quarter 3,840,000.00

Gross Income for 1st, 2nd, and 3rd quarters P11,520,000.00

Less: Business Expenses

1st quarter P1,440,000.00

2nd quarter 2,880,000.00

3rd quarter 4,080,000.00 8,400,000.00

Taxable Income P3,120,000.00

Income Tax Due (3,120,000.00 x 30%) 936,000.00

Less: Tax due for previous quarter

1st quarter 144,000.00

2nd quarter 288,000.00 432,000.00

Balance of Tax to be paid this quarter P504,000.00

d. Income tax due (or refundable) at the end of the year

Gross Income this quarter P7,440,000.00

Add: Gross Income for 1st quarter 1,920,000.00

Gross Income for 2nd quarter 3,840,000.00

Gross Income for 3rd quarter 5,760,000.00

Gross Income for 1st, 2nd, 3rd, and year quarters P18,960,000.00

Less: Business Expenses

1st quarter P1,440,000.00

2nd quarter 2,880,000.00

3rd quarter 4,080,000.00

Year quarter 5,040,000.00 13,440,000.00

Taxable Income P5,520,000.00

Income Tax Due (5,520,000.00 x 30%) 1,656,000.00

Less: Tax due for previous quarter

1st quarter 144,000.00

2nd quarter 288,000.00

3rd quarter 504,000.00 936,000.00

Balance of Tax to be paid this quarter P720,000.00

4. For taxable year 2014, the following cumulative balances appear in the records of Kingdom Corp., a
domestic corporation. 2014 is its third-year operations. For 2013, Kingdom has an income tax refund of
P32,000.

1Q 2Q 3Q For the year

Gross Income P2,560,000 P5,120,000 P7,680,000 P9,920,000

Interest on Philippine Currency

Bank Deposit 16,000 32,000 48,000 64,000

Business Expenses 1,920,000 3,840,000 5,440,000 6,720,000

Income Tax withheld 48,000 112,000 208,.000 368,000

a. Income Tax for the 1st quarter

Gross Income this quarter P2,560,000.00

Less: Business Expenses 1,920,000.00

Taxable Income P 640,000.00

Income Tax Due (640,000.00 x 30%) 192,000.00

Less: Income Tax Withheld 48,000.00

Balance of Tax to be paid this quarter P144,000.00

b. Income Tax Due at the end of the second quarter

Gross Income this quarter P5,120,000.00

Add: Gross Income for 1st quarter 2,560,000.00

Gross Income for 1st and 2nd quarters P7,680,000.00

Less: Business Expenses

1st quarter P1,920,000.00

2nd quarter 3,840,000.00 5,760,000.00

Taxable Income P1,920,000.00

Income Tax Due (1,920,000.00 x 30%) 576,000.00

Less: Tax due for previous quarter 192,000.00

Balance of Tax to be paid this quarter P384,000.00

c. Income Tax for the 3rd quarter

Gross Income this quarter P7,680,000.00

Add: Gross Income for 1st quarter 2,560,000.00

Gross Income for 2nd quarter 5,120,000.00

Gross Income for 1st, 2nd, and 3rd quarters P15,360,000.00

Less: Business Expenses

1st quarter P1,920,000.00

2nd quarter 3,840,000.00

3rd quarter 5,440,000.00 11,200,000.00

Taxable Income P4,160,000.00

Income Tax Due (4,160,000.00 x 30%) 1,248,000.00

Less: Tax due for previous quarter

1st quarter 192,000.00

2nd quarter 384,000.00 576,000.00

Balance of Tax to be paid this quarter P672,000.00

d. Income tax due at year-end

Gross Income this quarter P9,920,000.00

Add: Gross Income for 1st quarter 2,560,000.00

Gross Income for 2nd quarter 5,120,000.00

Gross Income for 3rd quarter 7,680,000.00

Gross Income for 1st, 2nd, 3rd, and year quarters P25,280,000.00

Less: Business Expenses

1st quarter P1,920,000.00

2nd quarter 3,840,000.00

3rd quarter 5,440,000.00

Year quarter 6,720,000.00 17,920,000.00

Taxable Income P7,360,000.00

Income Tax Due (7,360,000.00 x 30%) 2,208,000.00

Less: Tax due for previous quarter

1st quarter 192,000.00

2nd quarter 384,000.00

3rd quarter 672,000.00 1,248,000.00

Balance of Tax to be paid this quarter P960,000.00

e. Final Tax on Philippine currency bank deposit

Bank Deposit

1st quarter P16,000.00

2nd quarter 32,000.00

3rd quarter 48,000.00

4th quarter 64,000.00

Tax on Philippine currency bank deposit P160,000.00

Normal Tax versus MCIT

5. Miscellaneous Corp., a domestic corporation, is on its 5th year of operation in 2014, it has the following
data.

Sales P2,350,000

Cost of Sales 1,075,000

Business expenses 1,125,000

a. Gross income

Sales P2,350,000.00

Less: Cost of Sales 1,075,000.00

Gross Income P1,275,000.00

b. Normal tax taxable income

Gross Income P1,275,000.00

Less: Business Expenses 1,125,000.00

Normal tax taxable income P150,000.00

c. Income tax due

Normal tax taxable income P150,000.00

Tax Rate 30%

Income Tax Due P45,000.00

 Normal Rate

Sales P2,350,000.00

Less: Cost of Sales 1,075,000.00

Gross Income P1,275,000.00

Less: Business Expenses 1,125,000.00

Normal tax taxable income P150,000.00

Tax Rate 30%

Normal Tax P45,000.00

MCIT

Sales P2,350,000.00

Less: Cost of Sales 1,075,000.00

Gross Income P1,275,000.00

Multiply by 2%

P25,000.00

6. In 2014, Variety Corp., a resident foreign corporation, was on its 6th year of operations. The following
data pertain to its operation in the Philippines for the year 2014 and 2015.

2014 2015

Gross profit from sales P620,000 P720,000

Business expenses 530,000 612,000

a. Normal income tax for 2014

Gross profit from sales P620,000.00

Less: Business expenses 530,000.00

Taxable Income P90,000.00

b. Income tax due for 2014

Income Tax Due (90,000 x 30%) P27,000.00

c. Minimum corporate income tax for 2015

MCIT

Sales P720,000.00

Multiply by 2%

P14,400.00

d. Income tax due for 2015

Gross profit from sales P720,000.00

Less: Business expenses 612,000.00

Taxable Income P108,000.00

Income Tax Due (108,000 x 30%) P32,400.00

7. Fulfillment Inc., a resident foreign corporation, is on its sixth year of operation in 2014. For its
operation in the Philippines, the following appear in its 2014 and 2015 records:

Business expenses P795,000 P918,000

Normal Income Tax 31,500 39,600

a. Gross profit from sales for 2014

31,500/30 x 100 = 105,000.00

105,000 + 795,000 = 900,000.00

Gross Profit from sales P900,000.00

Less: Business expenses 795,000.00

Net Income 105,000.00

b. Income Tax due for 2014

Net Income P105,000.00
Tax Rate 30%
Normal Taxable Income P31,500.00

Gross profit from sales P900,000.00

MCIT Rate 2%
P18,000.00

c. Gross profit from sales for 2015

Gross Profit from sales P1,050,000.00

Less: Business expenses 918,000.00

Net Income 132,000.00

d. Income tax due for 2015

Net Income P132,000.00

Tax Rate 30%

Normal Taxable Income P39,600.00

Gross profit from sales P1,050,000.00

MCIT Rate 2%
P21,000.00