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    8 views11 pages

    Chapter 10 EXERCISES - Deductions

    Uploaded by

    cathyydump

    Copyright:

    © All Rights Reserved
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    of 11
    Ry PIO sg ta wae proved by AB COrPOEHON (Soma, Breen 28 "re an es 40009 econ sap et ae ter Pare es oicenses pain "72,000 Qecrsorco nese ses a 23000 mw mex 2018 200.0 Feo wear tt 2017 m0 rom tad rots cele st0t9p Fempe tort opos sa, Fromtank pst abroad 00 sara eevee tnt an Zio ‘aeons oritepemertorPecentge ‘ype? Shores on txssosenenis aS ire eprse ont oeamors aoe DeTERUMNE TE FOLLOMING "Dodi rest expense the year 2 Daaucbs tae ore year 4 Tale teres Pro2, (deny, 2018, Miko leased his vacant lt fora period of 12 yor Lenmar at an annual tao 240,000" was iso agreed Batcns oe ong B00 re nt for year 201 ‘4500000 rpresening real payment fr year 2018 Seay deposto 2400000, * Arnal ea propery x of 230,000 The ato contac prov Ret es among others that theless wil Fama Storey bung fx parking purposes ata cos of estan of he bulgng stall belong to he ‘soon expraton or tinaton ofthe lease contra 16 Chipter Beers ~ Det “y thee fem Gros one eee tia wet eto yeeg, 987 1. 2020 wn on ae ocean ee 2 Bede epee! temas } cman carat ios. Gor boron ne tn 8 Ck arn 00000 utes eating anal tres nce as ore ® OOS se Radar. Caen fa See ccane pros. {eater rceived an assessment fom te BIR ‘ung intrest of PS0.000 dua namo ie a recsed PYE8 O00 mut ea Monson duet nde payment of eous be Sears te ‘he amount is nause of PASEO ner oc ee Forever he ened P100,00 treet income om he uae Fok ost. ‘Requled: Deternne the desu orest ct Lester pros. (On ly 1.2018, tapayer obtained 8,200.00 oan rom bank wih annul interest rat of 12% The proceeds oh a amoung te P5.200000 net of inoest Answer the quatre under he ‘allowing independent cases 1 Assume the taxpayer ea reste cen (unr cash basis) and the loan including te trsts ayaba on June 30, 2048. How machi the ceauctbe interes expen fo 2018 and 20197 2 How much is the corectierost expense for 2016 and 2019 ‘assuming the taxpayer sa reser cian (unde cash basis) land tho foan i peyable on instalent os folows: P1000 on Septombor 30,2018, Domber 31, 2018, Nach 31,2019 and she 30, 2019| 2. Assume the taxpayer fe 8 domeste eoporation (under cash bass) andthe lan ncn he teres payee on une 20, 2019. How much he deduce rest expanse fr 2018 and 20199 ar yt Dedactions frm GOS Ireoy, Caaster 1-year P2000 tos _ cect 220.00 oa ibaa 22 caren ee et Seta at ne ef on Once St Ile crete Soe wg Se en i ear Sera Fs eros gor he sng Eker oes a — during 2018: sae oa Staconemapaste tweet | som cine npr oy orl semen" SS ae att Ones = ieee att Oto pn EOE ea et Sean ‘sumanaig share) ‘reat on preference shares 125.000 recite re deovesble interest of Omega for 2016 Pros. Pisea, a semployed sient lizon, pal the following taxes: lpi care 400.000 Profesnal 780 mvt and sand oe 20000 Ircare tx pad Singapore 180,000 Real propery taxon hs house 3.000, Frost Srey wks 0,000 sal feed a fore deve trucks 10,000 ‘rer ioel uses ies 12000, 5.000, ‘Spocel assessment on land used in business rut: weap ad ited inhi tun tat = Sol ran hae tx pn, Mac Sodan tie nye am onto cme 48 Ohper Exercises — Dedatioa fon Gros come 03, r 3a, omens Coporston ‘neues Ineocion whe condita” “who cence 8 $00 000 wot of ae ete ht i ts emgayese Pino were sent to bucnest caren pe + Piag.a00 espera shown ex am ae eres wining om me «750,00 taneporaln apenas of messenger tm les ‘several chents, penses of bee + P20 stesso ‘Roques: Detrmes lon expenses oduct by Omege Comeraton rom ts gress inome, 10.10. Basta Corporation took two key men insurance on the le of ts Beitident, Mr. Masigaig. In one’ pale. the benetioary De Crmporton to compensa forts expected ose ease of Seah of [m president. The company paid tla prersume of 0,000 on that poty._ Theta Gay deepal Ninga's wi ats Patvdcable beneficiary Dela pats P75,000 promume on hat pai "Required" Determine the amount of slewabie prem Farmer na cause dese Dota Capron Poms pro. ‘taxpayer a the flloning data fr 2018: (Gross coma rom business 1,000,000 Captal gain 30,000 Capital oss 20,000 Gporatng expenses 400,000, Donation to am acerdted NGO 30,000 20,000 Donation to CBCP DETERMINE THE FOLLOWING: 1 Taxable income assuring he taxpayer's an vidual taxpayer, single, and ih e compensation Ieame during the year amounting to P600,000 2, “Taxable income assuming the taxpayer ts @ domestic corporation. “9 ine so nt 78 a 725, oe ; Fe etme an seas Tothe'§ ermine HOw ‘other contribution ae oscar ct econo 2 wee ioeate mi apo rn tn giao Ce es one 6.200,000| = ee eo i Co erro roe = BeeRElan wo frogn private eunation ones Scimiroetre tee eer atl amount of deductible charitable ens prose ‘teed te ftoing rte year 2018 5,900,000 ‘Soatot Sie 00,000 $Seetecteneoyess ratotP100,000 winholding "800.000, iSeand Pso.0 SSS Medicare and Pag-ig Free teeta ak arte amore 30000 Figs banate given manager employees 136.000 toss ted preariston ang entontanment 100000, ‘nae Rent onense 420.000 Donan rou ane herbi instiutons 500,000 "REQUIRED: Determine he taxable income of Juan 450 ~~ p10. pee Eas — Delatioa fn. Gr heme iO ay 1, 2015, akoayer purchased for 8.000000 a vehicle ona, tied 38 delivery Wk or is Wading business, He eduted 'eogecaton on bab of ead une ofr) ', 2018, the aulomebe was portly damaged ah jartal_colsion wit ance vehice. The’ ost ct Topas tod t© 200,000. The taxpayer ecsved vaurance proceeds Sevdoama com ete ‘Detarmine the amount fas hat could be Geducto tom the taxpayers goss come pro.t6. Ciectmestic corporation proved the flowing resus of operations ‘oe taxable yoo Sales Gert of sles ‘Skcans income rom domeste corperation from reskdontcomoraton From nonrectent corporation From peso bank depostsin Mania From peso 8 depoats in Tagg From bank Sepoaks abr Royaty come ‘pal gam on sale at PEM oftnd in he Prppnes fel tor 10 years Capa gar on Sale of 2 10-year bonds of domestic ‘Stporaton ned for ok) Yeas Cepia ose on aie of bonds «domestic corporation ‘el for one (1 year Capital gan on eae of shares of stock of 9 domestic orporatom held fr sx (@) mont, sod Srey 8 aver “Ceptal gain on sae of shares of tock a domes arporaon ned for sx) months, so Hu PSE. income from rust indenture wih Secuty Bank Provitin tor bad dot Bad debts wten-of Recovery of bad debs witan of preceding year Satanos and wages excusing tinge benetside ‘De minimis banat provided to rank and fle ast 6,200,000 2500000, 0,000 30.000 2oio00 75000 50,000 #0000 30.000 o.000 500,000 30000 20000 15,000 +2500 25,000 8,000 20,000 40:000 380,000, 70,000 lguter Exerdises - Delactivas Jr Gross Ireay, a 1 manager sr am ow Fringe bonets rowed ip managerial employees: toy inoue | «@ one nan tno = cust “te spans on Ow on he ax assessment 15, sestaryome = sere = ene eye tater det sous a Seat 2 Sean a Deter ay pay a te 2 ofthe year 2 P5aT Fina taxon pestiv income 2 Total cpt gansta — TUEOREAE goo re to woe [Bepaers ht ae not rested as part of gross income. 12, Extusons ere he arguns, whi hola allows To be deducted from goss cums nore o ave a et income. 3. Alonabe. deduciane general refer to amounts that are ‘acted deat rom one's tl tax ability. 4 Deducdone whi constiute bribe, kickback, and other sims pyment mag fo an offs! of employee ofthe national. ocal foregn government or sitar entives, being against iaw and puble poy are not deduce fom gross income. 5. The deaici axe are Imted only to national 6. Domestic and resident foreign ‘corporation. taxable year wh MCIT cannot claim NOLCO. 7. Decline 'n vale trough market Nucuation of investments Sock ofa corporation is nota dedutbe lo, 8. Casualy, robbery, thet or embezzlement loses are deductb only when a "Declaration of Loss” is submitted within 45 60/5 rom the date of discovery ofthe casually or robbery, thet & gnoezent hal aed oss, ‘ na ‘te to casually, the measure of loss i the bo ‘vote ofthe eset reduced by any form of indemnity. id during the 452 hype Eee — D, hats fn a. 4, Ornar 10808 canbe deduct om 2 10 OS aah sao, oa net gg Ys 11 amore or conan, Corpor ose Sesictle ele 16 contotad 43.008 000 i On Opens the tion ie mode tee ei 08 of occurs when a ‘a thatthe ed eco how ftom tne sad woayers bole aceun 15. botoro 4 taayer ay Gage ad Sak de, bo mst sarin and be ate dombostte wih masons dope ot Src, te unetecey ot et 16, Whon secures wee he By en nds capa set an Moe wrton of he wit of ests te cas eer on eos stint - sr. invase of Bank, he BSP, tu te Monetary Board, shal Sheer the worhessnese and inlet oe bed ab, Shui shall approve the wigs te sid otedoss fom tra bei’sboko a css Ween oh nab yor 1a, The coat of easshls mprovemens shal be adc by icsece by spreading the cot hangovers rer ha St the mmprovement remaeg tem he eae, whichever Sore {9, Gam rom wath sale vansacton eae 20. Reve recording she twpayers boos of acc of estate ‘eotsetbis accounts does ro ansaue @wite of fhe eld tecovable Hone, shal bes vl bet eden a ‘ad do expense 21. Inno case may 8 resale om an insurance or suet ‘ompany be writen Fam te payee books ad ned Bb Soa deb dooycon sss Su2 cmpany as een ecared lose ue to Mectency 8m su amir eae By Insurance Commissone. 22, Bad Dob 9 deduction fom tha gos inca when an accu Is write —. 23. When allowance for elton sa eq he canta vata, no urthor allowance sale gare 453 Chanter Eevee ies estes Myatt HOLCO fem 8 saa eet ey a sx ioe cece ese cn oat Scan cer Seaton MULTIPLE CHOICE not. characteristic of @ deduction AS ge fc dS ay 1 were or pose, 2 reedom fo 8 charg gy rear subjected, bse wn ars ar sh Menta tineome subleet ton & his eubwacton to ar ject ete ee ora eens, tn oe gh ar as a A cee a coats ermee etic Se es rma stowed . FE rem mint ote coon Sore dan an ee ee scan oe asses 2. Th snot reuse lr business exponse to be doductbie ‘ Hmuttbe reesoneie Blt be pd dur te axabe year 2 The wifiideg tx otherwise required have been ecuced ond remit tothe IR «4 Timostbe order and noceesary 4 Oneat . te fotowing i dosuctbe rom gross income Personal bing an fariy expanses ‘Amount pait-aut for new uiding or for permanent ‘moron betemen mado ts nctease the valet over reste = : Lome fom sales of exc Bean member ofthe rose ip monetary va rocty oF iniocty 4 Value of fringe benefits, 454 ee Deductions frm GOs Iacon, v lgpler Exercises — Dede 7 (ptr Fe itis fam Gr hoon 0.8 en oto arg, 5. We? “Casual oeses on pone Seon ae, «Beas © Le ceed sen tw nomen, ¢ oe toe Se © ook shal be rooted -— sl fee meet te oe beeen re Ar 1. Ferincome tx prpses, hich of aon statis conc Sesene dosuetons? = 3 Deductions ar tensor anounced fon be Seiominaton soar . Ataxpayer can at ot any and all deduction aur by aw fo hs in of ene osm ee a «. Bedcton area mater cela wae &. Rictinesbove 8, Shrinkage In vaue othe stock ae los am wash se sre ‘Statement Loss oa secount of shrinkage ovale of he sack {trough fication in the market or here arene reakzad lose ‘Statement 2: Loss rom wash 12 Stotements 2 a ©. ‘Statement 1 is tus but statement 2 fie Statement 1 fate bl statement 2s Woe ‘Statements and? are ve 9. Wher of he foloning sateen rearing NOLCO incl? 1 The sures ent operating oe tary ver (WOLCO) tr order Case ar bien fe tre. MOL nt appaebl aga! Mert 4M, The foe (0) yearregamartry pte onthe cary-oet OF NOLCD sha ei on Totter he ‘he coperston it neon t unr he Mmm Corporat ncn Tex (IT) amputation, 485 politioes from Gres Icon, Y _qallofthe above coro ovr oma bier fete tpcued oO Eon unpaid WANE Oded tay ere came sued to al ay Ie irooed mar ct BY en douche nr! ‘ret pad one Spt gaan on scrip ddan ay hab on 1 erpeny of which he so Corberaton eeequabi owner oumicocy ite tax whore te intrest masts eoducble Wom gross Income expense thas Sinoss ineured fancy mena ‘i ge & Inurest pa on into an tm stn the taxable year in connection wth Miao or busines, shal be allowed as 12 Taxes paid x neu Ie mngayers profess, oan eo Ponting tox camod as tx cred © Eat nd donor's anes. Motte crates. 12. which fe flowing taxes i lowes tobe deducted rom gross Income dared rom he exer ofa profession, tad oF anes? 1 Phipine noone tax Ea nd donor taxes © Taxoneale of shares of tock vaded through the local stockaschange 4. Inport ute 14 Te loving rouse ne cary over of NOLCO, ext re must be ho substan change inthe owneShi “emu change in te ° the . Camy-overs not alowed ifthe corporation i subject © SETS pe tent he crvraton th 450 whapter Exercises fs sage ctu Someta penstncnat 7 Me | 4. The cam-overis god or ene i} ye eee of the folowing i not oe regard 'NOLCO is slowed as desucton fom woncse come Ihe nex 3 succooding yore" usness Meome OF ,Domootc and reset ren corpeaton Normal income tani sowed wit NOLO. . Offahore baring unite orc corporation allows fin NOLCO. a <4. Prato educational instton oer ox Fate's alowed win ouco, a ferent as. whieh ce. wich of the floning eed oda 16. vig “32000 Imerestincome onnetes 2800016400 7 cowvable ‘Capital gain (short term) = "9000 sa00 Capital oss long-term) 20000 22.000 ine 459,000 Business expenses 1478000 1.025.000, DETERMINE THE FOLLOWING: 47 The taxable incorelioss) 92018 opera a0 Pazran & Paro, Pica 18, Tetra ncaa) n 2019 a PO c P(132,600) peraaao & Pibeato ss Dedactons from Gress ay lier Eeraet nccmeitos#)! 292°. 5470,600 sa To 3 too be sy tormeln hie SNE. Ate, cohen aia PEPE sired paral Saage, The Sects ree ese rao 500.000 ‘Sea we eat ton 80.00 ‘Sit ene Sepa ie ‘Sean nde oes? ow muse oy 4 Proo.000 me rere sont tt be name smmeninee S Peep inl ad, Se ae Bin’, ete eta smear Sc! me ertci mci ors in a a SES cae a a Rane cree 22.) tmoaye hos a business propery having an adusod base of 20000, t= campleey Seswoyen. by fre in 2038 but moneaed by anneuance clam for PEOD.000" How much ‘= P1200000| «©. P200,000 3.P 100/000, 23 Vine ofetotowng snot a sadutble oes? 3: Lacs ue to removal or demotion of ld building, the Scrapping ol cd machinery or equipment incient ‘onnal oc ropacement ass de removal of bung or realestate purchases ene puchase was er the squition of te and ‘Rutan use the bun oss in va of secures of such extent that the ‘stents have become worthless and are writen of se Sa =f 2. ic of eon ets ter © tose en eater of © Sek incite © monn sete for ste fora son corporation 25. Nha company was merged wih Beta, In, an ony the later 2 nso i ym Seer ata s moran ere, Hin, tenth omen Pe nen ere acento oc ‘oom wi mean rsa a = Finan Eanes [ae ‘Ataxpayor received a donation of ca wih a flr mael value of 400,000 atthe time ofthe denaton, ba which he soner [Soqured at's price of PS00,000 Tho taxol oe #7240,000. The sale rested mals of ‘e P100,000 720,000, ®. p200.a00 6 Pra0.o00 ‘One of he following isnot requisite for Seduction of bad dats ‘2 There. must bean exiting Indebtecness veto the {Enpayer which must be vat and lagi semandabie ‘The. dobt must bo connocted wih pofssion, Wade, oF business ofthe taxpayer ‘Tho debt must be acualy ascarid to be worthless and uneottble ane charged of the books of accounts Scot the ond ofthe table ose ‘Tho. debt must have a matory of not more than We 28, One ofthe flloning i a deductive bad debt: ‘Bad Gebt not connected win the profession, wade or business of he exoaver , Bad "debt sustaned in a taneacton entered ino by elated pares, 489 Dalatives from Gross hay ert yon which th ca er ease rev oe rind nts OP gama eched dae ines bt arpa ane amon oi, Seite encore teens wr? 2. ven othe lena had debt 18 POL eae wey, Fone rts mae ' ty Reaactn rom bos eet syn fb tt wn te ay ee tarot cotton may be een « itawimeecncacnry maces” Kiser erm sp tn ce eon, eee eee annunosmananntenins te stare rey ‘defeat faa, relent a1. Uo ows sof oma Caerator's shares of soca ins Peon ke 0,000 Leama to eae peas gotta ike Use ons sna? "ce te ard ceomar re 2% coms respon fate ike an Leona eve «Fetes ts sto ae of pay Norte me erour of os cnn been wh crane Cate bi wis ‘asa eur a er debs avabo nt Whang conaisered reat 8 2 During 2018, Me crested a sti avr of is end Leona. He appointed Aty. Ong as he ste. A roth lr, Bran ceaed austin favor of his alectonate tend, Bian lapponied Ke Emong ashe bust. Later during the yes. (ng «property to Ka Eng a price whieh s substan Laver hn te property's cent markt valve. Can Aly. 09 ‘duct fossa est of he sal leper Ecrssa - Uf Fee Debt fo Tete OP A, on ans emcee 10 eg rect °° 08 Enon esc ot teeth ren ations rr eer erie ween No, buen bo scarier Ce Sicha Sevweorewee, tere ‘suet wane ars sae aaa tas a 44, Proceeds of insurance en by coponton ate te fan Eireottis eam etn Dace opiate ‘3 Exempt fom name ax B-Porottaxatie reome 6. Subject fal ox 4 Party exomp party able 35. Te prema aby te cops ne pig rs Dedietole een ft crperaon Bath's andt Nether nr" 26. ch statment lana? Dassen rep: > iealoed on wang ses 3: ttre peat eas n og baste Pupp oes 20) ttm re kbc Proppees Pare: copetrs sa alow oly Xa fre sadn Pes TP Tlen ram steer pectin of bang 0 the mie | “ “he spay w28 Ang te ang condominium unt ot rascal, eee ani se rien fe fon 3 Use fara ee we gat a al eitain requisites. One ofthe fllowing is not a requisit Oa and operated exclusively for scent, Ses ory Ss concen an Si pre comevion anette ie mere is sca Sera mens aeons dese Edom Seema eee pale lnorarns saree see cera Ce ee ee mae oni coe catnip amen en ores oa mock 62 yy Chee Excercises ~ Dedactions fom Gross Decome Cone of te following neon lethal an bene ot a" Donatons 10 Goverment of ey Donato 1 Goverment of be Prigpines o& 0 he {Goverment Sorportone, eran tea ee ‘mance, pone ier oco be ved inns = ®, Donatons toca teragn ete Sherntona! ‘rganzations (mtr atonal Rea Coss, Wo oath Sraarcaton, — Donation 1 acredos non-government organizations ot nom-prft domestic copratons tat sass Pe ut ‘equrement ae by ie 44. Donations mage forthe use ofthe Goverment of the Prilopnes or ay ths ances or pose’ essay ‘exclusively for public purpose, = . 44, Whieh statment i et conact? ‘9 The deucton ofan iid! for contrbuons subject lnitaton shouts nt exceod (10%) af he arabe Income from business, sade or profession lore decoy foe ‘ontnbtons| The deduction of a corporation for contbutons suboc to Imitation shoud nat exosed two. percent (3) of hs texas Income tom business or tae lors daccon for conttntons . Contrbtone media nts fund dove forte rl of tlamty wets are deducts fom gross noome, 1, Contributions et canned goods to student organizations ‘uring tne Chrismas season for Sstbaon fo Murai frmates are deduce rom goss income 42, What would be the allomabe deduction for P80 conrbuton| ‘made bya resident ctzant a aiousorgniaaton from Hs 70,000 net income aftr carbon? 3p 500 ‘200 b.Pr000 e000 43, A domestic corporation has the fotoming data on income and ‘Gross business income 5,200,000 Bcduchonsincugng SSS and Phibeatn 2,500,000 ‘contributions of 180,000, resto Government-pony project 100,000 Contributions to Ge poy 13000 CCntribstan to foreign privat foundation 463 ‘ag enh othe = Pa d. P211,006 Teme fore yr sean eta a atte wore ote ys, net of P100,000 ey Shion EE ca ans Robgeeaumcimmoneenoorees 30am ampere emsorce kan genmaeecarencmeas” kg soca a Reet acum ators HOE ‘pm amurt hat Juan wil repr as taxable net income fo Bie shaloe 1 Pe.o4 000 ° B paass ea “ 2.997 000, Parosr 00 Statement: Conbutons by te omployes to 8 pension stor peeve cot dedi In fn he year tha the employer ‘Rade te conrbutona, he son tho cash basis of accountng. ‘aromont &Conreutone or donations given doc to inaahas cant be deaices from gross income. ‘PSatoments 1&2 ar flse Staten tse bu statement 2a false Sialament 1 false bt statement 2 rue ‘Statens and? are ue 48, n employer maintains pension tust forts employeas. The ~

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