Problem A

1. Resident Citizen
A. Taxable Net income PH Abroad
Gross Income 1,000,000 500,000
Business Expense (700,000) (430,000)
Compensation Income 600,000
Int income abroad 30,000
Div. Income res-for 40,000
Raffle draw winning 10,000 ________
Total taxable net income 910,000 + 140,000 = P1,050,000

B. Income tax payable

Taxable net income - 1,050,000
(800,000)
Excess over 800k- 250,000
(2023 tax rate) - x 25%
62,500
+102,500
165,000
CWT - (125,000)
Income tax pay - P40,000

C. Total final taxes on passive income

Dividend income from domestic corp - 50,000x10% = 5,000
Int. income from peso-bank deposit - 20,000x20% = 4,000
Int income from FCDS deposit - 40,000x15% = 6,000
Royalty income - composition - 25,000x10% = 2,500
PCSO winnings -200,000x20% = 40,000
Final taxes on passive income P57,500

D. Total Income tax expense

Basic income tax - 165,000
Final tax on passive - 57,500
Total income tax exp - P222,500

2. Non resident Citizen

A. Taxable Net income PH
Gross Income 1,000,000
Business Expense (700,000)
Compensation Income 600,000
Raffle draw winning 10,000
Total taxable net income 910,000
 B. Income tax payable
Taxable net income - 910,000
(800,000)
Excess over 800k- 110,000
(2023 tax rate) - x 25%
27,500
+102,500
130,000
CWT - (125,000)
Income tax pay - P5,000

C. Total final taxes on passive income

Dividend income from domestic corp - 50,000x10% = 5,000
Int. income from peso-bank deposit - 20,000x20% = 4,000
Royalty income - composition - 25,000x10% = 2,500
PCSO winnings -200,000x20% = 40,000
Final taxes on passive income P51,500

D. Total Income tax expense

Basic income tax - 130,000
Final tax on passive - 51,500
Total income tax exp - P181,500

3. Resident Alien
A. Taxable Net income PH
Gross Income 1,000,000
Business Expense (700,000)
Compensation Income 600,000
Raffle draw winning 10,000
Total taxable net income 910,000

B. Income tax payable

Taxable net income - 910,000
(800,000)
Excess over 800k- 110,000
(2023 tax rate) - x 25%
27,500
+102,500
130,000
CWT - (125,000)
Income tax pay - P5,000
 C. Total final taxes on passive income
Dividend income from domestic corp - 50,000x10% = 5,000
Int. income from peso-bank deposit - 20,000x20% = 4,000
Int income from FCDS deposit - 40,000x15% = 6,000
Royalty income - composition - 25,000x10% = 2,500
PCSO winnings -200,000x20% = 40,000
Final taxes on passive income P57,500

D. Total Income tax expense

Basic income tax - 130,000
Final tax on passive - 57,500
Total income tax exp - P187,500

4. Non resident Alien engaged in trade or business

A. Taxable Net income PH
Gross Income 1,000,000
Business Expense (700,000)
Compensation Income 600,000
Raffle draw winning 10,000
Total taxable net income 910,000

B. Income tax payable

Taxable net income - 910,000
(800,000)
Excess over 800k- 110,000
(2023 tax rate) - x 25%
27,500
+102,500
130,000
CWT - (125,000)
Income tax pay - P5,000

C. Total final taxes on passive income

Dividend income from domestic corp - 50,000x20% = 10,000
Int. income from peso-bank deposit - 20,000x20% = 4,000
Royalty income - composition - 25,000x10% = 2,500
PCSO winnings -200,000x20% = 40,000
Final taxes on passive income P56,500
 D. Total Income tax expense
Basic income tax - 130,000
Final tax on passive - 56,500
Total income tax exp - P186,500

5. Non resident alien not engaged in trade or business

Compensation income, Philippines - 600,000
Dividend income - DC - 50,000
Interest income bank dep. PH - 20,000
Royalty income from composition - 25,000
Raffle draw winnings - 10,000
PCSO winnings - 200,000
Gross income 905,000
Tax rate x 25%
Income tax due P226,250

Problem B
1. Income tax payable, first quarter
Gross profit from sales - 300,000
Less: Business expense - (120,000)
Taxable Income - 180,000
Tax rate - exempt
Income tax due -
Less: income tax prev. Paid - ______
Income tax payable, 1st q - exempt

2. Income tax payable, second quarter

Gross profit from sales - 650,000
Less: Business expense - (262,000)
Taxable Income - 388,000
- (250,000)
Excess over 250,000 - 138,000
Tax rate - x 15%
Income tax due - 20,700
Less: income tax prev. Paid - ______
Income tax payable, 2nd q - P20,700
3. Income tax payable, third quarter
Gross profit from sales - 910,000
Less: Business expense - (405,890)
Taxable Income - 504,110
-(400,000)
Excess over 400,000 - 104,110
Tax rate - x 20%
20,822
+22,500
Income tax due - 43,322
Less: income tax prev. Paid - (20,700)
Income tax payable, 3rd q - P22,622

4. Income tax payable, fourth quarter

Gross profit from sales - 1,200,000
Less: Business expense - (426,000)
Taxable Income - 774,000
(400,000)
Excess over 400,000 374,000
Tax rate - x 20%
Income tax due - 74,800
Less: income tax prev. Paid - (43,322)
Income tax payable, 4th q - P31,478

5. Total final taxes(for the year) on passive income

BPI - 16,000
UCPB - 18,000
Metro - 30,000
Total - 64,000
Tax rate- 20%_
P12,800
Dividends - +3,000
Final tax - P15,800

6. Total capital gains tax

Selling price - 600,000
x 6%
Total CGT - P36,000
Problem C

Amount Subject to Subject to Basic Exempt

FBT Tax

1. Officer’s expense
account not subject
P120,00
0
✔️
to liquidation

2. Officer’s expense
account subject to
80,000 ✔️
liquidation

3. Personal expenses
of the company
50,000 ✔️
officers, paid for or
reimbursed by the
company employer

4. Annual uniform
allowance granted
6,000 ✔️
5,000
to an executive

5. Housing benefits of
officials of the PHil
360,000 ✔️
army

6. Housing benefits of
officials of the Phil
250,000 ✔️
army

7. Housing unit
furnished to an
45,000 ✔️
employee…

8. Monetized unused
vacation leave
15,000 ✔️
 credits not
exceeding 10 days

9. Household
personnel benefit
60,000 ✔️
by an officer of a
domestic corp

10. Annual medical

cash allowance to
1,500 ✔️
dependents

Problem D
Case A
1. Tax due on its ordinary income
Gross sales P10,000,000 P5,000,000 P15,000,000
Sales returns 200,000 (200,000)
Cost of goods sold 3,500,000 2,250,000 (5,750,000)
Operating expenses 2,800,000 1,100,000 (3,900,000)
Interest income from
trade receivable 100,000 50,000 150,000
Interest income
from BPI deposits-USA 80,000 80,000
Interest income from money
market placement 100,000 100,000
Dividend income-resident
foreign corp. 45,000 45,000
Dividend income-nonresident
foreign corp. 30,000 30,000
Royalty income 25,000 25,000
Taxable income P5,580,000
Tax rate ______ 30%
Normal Corporate Income Tax Due P1,674,000
2. Total final tax due on passive income
Interest income from BPI - 100,000x20% = 20,000
Interest income from FCDS - 150,000x15% = 22,500
Income from money market - 200,000x20% = 40,000
Royalty income - 50,000x20% = 10,000
Final tax on passive income - P92,500

Total capital gains tax

Gain on sale of shares sold directly to the buyer 150,000 x 15% = 22,500
Sale of real property in the PH (9,000,000 x 6%)= 540,000
CGT - P562,500
Case B
1. Tax due on its ordinary income
Gross sales - P10,000,000
Sales Return - (200,000)
COGS - (3,500,000)
Operating Expense - (2,800,000)
Int income from trade - 100,000
Div income res-for - 45,000
Taxable income - 3,645,000
Tax rate - x 30%
Tax due on ord income - P1,093,500

2. Total final tax due on passive income

Interest income from BPI - 100,000x20% = 20,000
Interest income from FCDS - 150,000x7.5% = 11,250
Income from money market - 200,000x20% = 40,000
Royalty income - 50,000x20% = 10,000
Final tax on passive income - P81,250

3. Total capital gains tax

Gain on sale of shares sold directly to the buyer
100,000 x 5% = 5,000
50,000 x 10% = 5,000
CGT due - P10,000