ITLIONG, OLIVIA C.

3FM-01

Module 16
Lesson Title: Regular Income Taxation

A. LESSON PREVIEW/REVIEW
Identification:
1. Compensation is the total cash and non-cash payments that you give to an
employess in exchange for the work they do for your business?
2. Fringe benefit this is means any good, service or other benefit furnished or
granted by an employer in cash or in kind, in addition to basic salaries to
employees.
3. FBT this is computed using a rate is 35% and the gross-up factor in
computing the grossed-up monetary value of the fringe benefit is 65%.
4. Capital asset this refer to all real properties held by a taxpayer, whether or not
connected with his trade or business, and which are not included among the real
properties considered as ordinary assets.
5. Ordinary asset refer to all real properties that maybe used in for business or
normal course of business.

Problem Solving:
An employer gave an educational assistance to one of its magers amounting
P78,000.00 that is seen to benefit the company’s growth.
Taxable fringe benefits 78,000
Multiply by: Gross up rate 65%
Grossed up monetary value 50,700
Multiply by: Tax rate 35%
Fringe benefit tax P17,745

What I Know Chart

What I Know Questions: What I Learned
it is when you’re 1 When do you say Reducing the number
reducing the amount of deductions what comes of something
something into mind?
Special deductions lost 2 What are the ordinary Ordinary deductions
incurred in acquiring and special deductions common and accepted
treasury shares you know? to a special trade or
business

Activity 2: Answer guided discovery using guide questions.

1. How can expense be allowed as a deduction for income tax purposes
For tax purposes, a deductible is an expense that an individual taxpayer
or a business can subtract from adjusted gross income.

2. List some of the allowable deduction for income tax purposes

Amortization, Bad debts, Commissions

3. What are examples of Special Allowable Itemized Deductions?

Medical expense, charitable, contributions

4. Briefly explain to each other Net Operating Loss Carry Over (NOLCO)
The Net Operating loss of the business or enterprise for any taxable
year immediately preceeding the taxable year.
Module 19
Lesson Title: Regular Income Taxation

A. LESSON PREVIEW/REVIEW
Enumeration: Give at least five (5) itemized allowable deduction for income tax
purposes
Bad debts
Amortizations
Charitable contributions
Commissions
Depletion

Essay:
1. Explain the application of Net Operating Loss Carry Over
The net operating loss of the business or enterprises for any taxable
year immediately preceeding the current taxable year, which had not been
previously offset as deduction from gross income shall be carried over as
dedcution from gross income for the next 3 consecutive taxable years
immediately following the year of such loss.

What I Know Chart

What I Know Questions: What I Learned
Pure compensation 1 What are the different Pure compensation
earners, professional kinds of individual earners, professional
income earners, mixed raxpayers? income earners, mixed
income earners income earners
Graduated income tax 2 What is the difference Graduated income tax
rates you will pay using graduated income rates you will pay
income tax and tax table with 8% tax income tax and
percentage tax, for 8% rate? percentage tax, for 8%
no need to pay 3% no need to pay 3%
percenatage tax percenatage tax

Activity 2: ‘turn and talk’ with seatmate using guide questions.

1. Differentiate pure compensation income earners, business income earners
and mixed income earners.
Pure compensation income earners, taxpayers with an employee -
employer relationship.
Business income earners, only source of income is by conduct of
business.
Mixed income earners, simultaneously earning income from running
business or practice of profession and from emplyee-emplyer
relationship.

2. From the list of taxpayers metioned in, how are they taxed?
Pure compensation income earners - tax due is computed using the
update income tax table
Business income earners - tax due is computed using the updated
income tax table or preferential rate of 8%
Mixed income earners- tax due is computed using the updated income
tax table for compensation income and prefferential rate of 8%
Module 20
Lesson Title: Regular Income Taxation

A. LESSON PREVIEW/REVIEW
Enumeration:
Problem solving:
Problem #1: An individual taxpayer who earns purely business sources reported
net income of P650,000. Included in the reported net income is P50,000 gain on
sale of equipment previously used in the business. The business also total
expenses for the year amounting to 200,000. The taxpayer signifies his intention
to be taxed using optional standard deduction.
Required: (1) compute the tax due
650,000
+ 50,000
700,000
-200,000
500,000
x 40%
Tax due= P200,000

Problem #2: An individual taxpayer has a compensation income of P450,000 for

the taxable year. 13th month and other benefits amounted to P50,000. In addition,
he also has a business with reported net income of P850,000. The business also
total expenses for the year amounting to 200,000. The taxpayer signified his
intention to be taxed using optional standard deduction.
Required: (1) compute the total tas due
850,000
+450,000
1,300,000
-50,000
1,350,000
- 200,000
1,150,000
x40%
Tax due= 460,000

What I Know Chart

What I Know Questions: What I Learned
If either did not signify 1 When do you say that a
If either did not signify
intention to be taxed at taxpayer is also subject
intention to be taxed at
8% or signified being to percentage tax? 8% or signified being
tax using graduated tax using graduated
income tax income tax
Fill out the BIR form 2 List some ideas you Fill out the BIR form
have in filling income
taxes?

Activity 2: ‘Guided discovery’ using the guide questions

1. What are the differenece do you notice in the BIR forms in terms of taxpayers?
Responding to the taxpayer’s needs, the BIR enhanced its tax forms
and used technology-based design.

2. What areas of the BIR forms are similar to one another?

There is no prescription period of amending the return.

3. What items in the BIR forms are new to you?

All of the items are new to me since I’ve never saw BIR forms before.
Module 22
Lesson Title: Corporate Income Taxation-Special Corporations

A. LESSON PREVIEW/REVIEW
Problem Solving:
Ms. TP operates a convenience store while she offers bookkeeping services to
her clients. In 2018, her gross sales amounted to 800,000, in additio to her
receipts from bookkeeping services of P300,000. She already signified her
intention to be tax at 8% income tax rate in her 1st quarter.
Required.
1. Compute the taxpayer’s due.
800,000
+300,000
1,100,000
- 250,000
850,000
x8%
Income tax due= 68,000

2. Assuming the taxpayer did not signify her intention to be taxed at 8%.
Compute the tax due. The cost of sales and operating expenses amounted to
P600,000 and P200,000, respectively.
600,000
+200,000
800,000
- 250,000
550,000
x8%
Tax due = 44,000

What I Know Chart

What I Know Questions: What I Learned
Mixed income earners, 1 What are the different Mixed income earners,
pure business earners, kinds of individual pure business earners,
pure income earners taxpayers? pure income earners
Graduated income tax 2 What is the difference Graduated income tax
rates you will pay using graduated income rates you will pay
income tax & tax table with 8% tax income tax &
percentage tax for 8% rate? percentage tax for 8%
no need to pay 3% tax no need to pay 3% tax

Activity 2: ‘Think-pair-share’, Students find a partner, answer the following

guide questions.

1. Enumerate the general classification of corporations

Domestic corporations, Resident foreign corporations, Non-resident
foreign corporation

2. What makes special domestic corporations different from regular

corporations?
Certain corporations are subject to a special tax treatments or
preferential tax rates lower than the 30% regula corporate income tax.
Special domestic corporations have a proprietary educational institutions
and non profit hospitals, foreign currency deposit units (FCDUs) amd
Expanded FCDUs, and PEZA or BOI registered enterprises. Regular
corporations covers all taxable income of corporations that are not subject
to FT or CGT.
3. Share to one another what you understood on tax taxation of FC
4. DUs, EFCDUs, Tax on PEZA or BOI- registered enterprises
FCDUs are limited to short-term foreign currency transactions while
EFCDUs are allowed both short-term and longer-term foreign
currency-denominated transactions. All business enterprises operating
within the Philippines Economic Zone Authority (PEZA), or simply
ECOZONE, shall pay a tax of 5% of gross income earned in lieu of all
taxes, local and national, except real property tax on land of
developers. New registered firms under the Board of Investments (BOI)
enjoy income tax holiday (income tax exemption) for 6 years from
commercial operations for pioneer firms and 4 years for non-pioneer
firms. The income tax holiday may be further extended not to exceed 10
years upon meeting certain conditions.

5. Share to one another what you understood on Tax OBUs, RHQs and ROHQs
of multinational companies.
The computatio of the taxable income of OBUs shall include items of
gross income subject to regular tax from withi the Philippines less
deductions directly attributable and common expenses reasonably
allocable thereto. RHQs are exempt from income tax since they are merely
administrative offices which serve as a supervision, communication, and
coordination center of subsidiaries, branches or affiliates of their home
office. They do not earn income. ROHQs are subject to income tax at 10%
of taxable income. Contrary to RHQs. ROHQs are allowed to derive income
on their services to their affiliates, subsidiaries or branches of their home
office or parent company in the Philippines. RHQs and ROHQs are exempt
from all kinds of local taxes, fees or charges imposed by a local
government unit, except real property tax on land improvements and
equipment
Module 23
Lesson Title: Corporate Income Taxation - Regular Corporations

A. LESSON PREVIEW/REVIEW
Essay and explanation:
1. For tax purposes list and explain each other the general classification of
corporations
A. Domestic Corporations
B. Resident foreign corporation
C. Non-resident foreign corporation

2. Explain what are special domestic corporations for tax purposes

A domestic corporation is subject to tax on its worldwide income

3. What are foreign corporations and explain their taxability in the Philippines
A foreign corporation is subject to tax only on income from Philippine
sources.

What I Know Chart

What I Know Questions: What I Learned
A business tax 1 What comes into your A business tax
mind when you hear
corporate income tax?
The overall tax rate 2 What do you mean by The overall tax rate
being deduct in a gross corporate income being deduct in a
business tax? business

Activity 2: ‘Guided discovery’ answer the following guide questions

1. Explain the taxability of corporations in the Philippines
The corporate income tax for both domestic and resident foreign
corporation is 30% based on net taxable income.

2. How is the computation of regular corporate income (RCIT)

The regulae corporate income tax is 30% based on net taxable income.

3. What do you understand on Corporate Gross Income Tax (GIT)

Gross income is all income that is taxable

4. How is the computation of minimum corporate income tax (MCIT)

MCIT is computed as 2% of gross income if it has negative taxable
income
Module 24
Lesson Title: Regular Income Taxation

A. LESSON PREVIEW/REVIEW
Esaay and explanation:
1. For tax purposes list and explain each other the general classification of
corporations
A. Domestic Corporations
B.Resident foreign corporation
C. Non-resident foreign corporation

2. Explain what are special domestic corporations for tax purposes

A domestic corporation is subject to tax on its worldwide income

3. What are foreign corporations and explain their taxability in the Philippines
A foreign corporation is subject to tax only on income from Philippine
sources.

What I Know Chart

What I Know Questions: What I Learned
Imposed as penalty on 1 What is improperly Imposed as penalty on
corporation accumulated earning corporation
tax?
Total profit of a branch 2 What comes to mind Total profit of a branch
when you hear branch
profit remittance?