Income Tax on Corporation

Definition of Terms
• Corporation - It includes partnership, no matter how created or
organized, joint stock companies, joint accounts (cuentas en
participacion), associations, or insurance companies, but does NOT
include general professional partnership and a joint venture or
consortium formed for the purpose of undertaking construction
projects or engaging in petroleum, coal geothermal and other energy
operations pursuant to an operating or consortium agreement under
a service contract with the Government.
• Domestic – When applied to a corporation, means created or
organized in the Philippines or under its laws.
• Foreign – When applied to a corporation, means a corporation which
is not domestic.
• Resident Foreign Corporation – Applies to a foreign corporation
engaged In trade or business within the Philippines
• Non-resident Foreign Corporation – Applied to a foreign corporation
not engaged in trade or business in the Philippines
Classification of Corporation
• Domestic corporation
• In general
• Taxable Partnership
• Proprietary educational institutions/Non-profit hospitals
• FCDUs of domestic banks
• Service contractors/subcontractors engaged in petroleum operations
• Exempt corporations
• GOCCs: Excluded: SSS, GSIS, PHIC, LWDs
• Resident Foreign corporations
• In general
• Resident international carriers
• OBUs
• ROHQs/RHQs of MNCs
• Service contractor/subcontractors engaged in petroleum operations
• Ecozone enterprises
• Non-resident foreign corporation
• In general
• Non-resident owners/lessors of vessels chartered by Philippine nationals
• Non-resident owners/lessors of aircraft, machineries, and other equipment
• Non-resident cinematographic film owner, lessor, or distributor
• Exempt corporations
Types of Income Subject to Tax
• Ordinary Income
Corp Source Tax Base Tax Rates
1. Domestic Within and Net Income 30%
without the Ph
1. RFC Within the Ph Net Income 30%
only
1. NRFC Within the Ph Gross Income Final withholding
only tax of 30%
Types of Income Subject to Tax
• Passive Income
DC, RFC NRFC
Interest on currency bank 20% 30%
deposit
Yield or any other    
monetary benefit from:    
1. Deposit substitute 20% 30%
2. Trust funds, and
   
similar arrangements
20% 30%

Royalties 20% 30%

Interest from a RFC – 7.5% Exempt
depositary bank under DC – 15%
the expanded foreign
currency deposit
system
Types of Income Subject to Tax
• Intercorporate Dividends
Payor Recipient Tax

Domestic Corporation Domestic Corporation Not taxable

Domestic Corporation Resident Foreign Not taxable

Corporation
Domestic Corporation Non-resident Foreign 15% final Withholding tax
Corporation
Capital Gains Tax on Capital Gains
• Sale, exchange or other disposition of domestic shares of
stock:
• Not traded at the stock exchange:
• By Domestic Corporation:
• Net capital gain 15%

• By Foreign Corporation:
• Net gain not over ₱100,000 5%
• Amount if excess of ₱100,00010%
• Sale of Real Property Classified as Capital Asset
• Transaction subject – the sale, exchange, or other disposition of lands
and building which are not actually used in the business of the
corporation and treated as “capital assets”.
• Tax rate and base –
• Seller domestic corporation – Final tax of 6% based on the gross selling price
of FMV, whichever is higher. The FMV is the higher between the
Commissioner’s value and the Assessor’s Value
• Seller RFC – Gain on sale is returnable, and subject to normal tax rate (30%)
• Seller NRFC – Final tax of 30% of the capital gain realized on the sale
• Exemption from the CGT
• Sale of raw lands to be used for “socialized housing” projects, or sold under
the Community Mortgage Program under R.A. No. 7279 (Urban Development
and Housing Act of 1992)
• Land transfer under the Comprehensive Agrarian Reform Law of 1988.
Domestic Companies Subject to Special Tax
Rates
1. Proprietary educational institutions
• Proprietary educational institutions are subject to a special tax rate of 10% of
taxable net income within and without the Philippines.
2. Hospital which are non-profit
• Hospital which are non-profit are also subject to a special tax rate of 10% of
the taxable net income within and without the Philippines.
• Provided that the gross income from unrelated trade, business, or other
activity does not exceed 50% of the total gross income derived from all
sources. However, if it exceeded 50%, the normal tax rate will be applied on
the entire taxable income (i.e. 30%).
3. Final tax on income of a Foreign Currency Deposit Unit (“FCDU”) of a local
bank under the Expanded Foreign Currency Deposit System (“FCDS”)
• Income from foreign currency loans granted to Philippine residents, (other than
OBUs or other depository banks) – 10% final tax
• Interest income from foreign currency interbank deposits – 10% final tax
• Income from foreign currency transactions with non-resident, OBUs, local
commercial banks, and branches of foreign banks authorized to transact business
under the FCDS – Exempt
• “Income from foreign currency transactions” shall include interest income
from lending operations, including bank charges, commissions, service fees,
and net foreign exchange transaction gains.
4. Service Contractors/Subcontractors Engaged in Petroleum
Operations
• Liable to an eight percent (8%) final tax on gross income derived from
such contract in petroleum operations
• Provided, however, that any income received from all other sources
within and without the Philippines in the case of domestic
contractors/subcontractors, shall be subject to the regular income tax
under the Tax Code.
5. Ecozone Enterprises
• All business enterprises registered with the Philippine Economic Zone
Authority (“PEZA”) or Subic Bay Maritime Authority (SBMA) and operating
within the Special Economic Zones (“ECOZONE”) availing the 5% GIT incentive
shall be taxed 5% of gross income on registered activities. Three percent (3%)
shall be paid to the National Government; Two percent (2%) to the city or
municipality where the enterprise is located.
6. Tourism Enterprises registered with the Tourism Infrastructure and
Enterprise Zone Authority (TIEZA)
• As an alternative to the Income Tax Holiday a new Registered Tourism
Enterprise within a Tourism Enterprise Zone may, in lieu of all national and
local taxes except real estate taxes and fees as may be imposed by the TIEZA,
pay a tax of five percent (5%) on its gross income earned from its registered
activities.
• The 5% gross income tax shall be remitted as follows:
• One-third to be proportionally allocated among affected cities or municipalities based on
the area of the RTE;
• One-third to the National Government; and
• One-third to the TIEZA
7. Microfinance NGO
• A duly registered and accredited Microfinance NGO shall pay a two
percent (2%) tax based on its gross receipts from microfinance
operation in lieu of all national taxes. However, the non-microfinance
activities of Microfinance NGOs shall be subject to all applicable
regular taxes.
Resident Foreign Corporations subject to
Special Tax Rates
1. International carriers doing business in the Philippines shall pay a tax
of two and one-half percent (2 ½ %) of Gross Philippine Billings (GPB)
• GPB – Gross revenue derived from carriage of persons, excess
baggage, cargo and mail originating from the Philippines in a
continuous and uninterrupted flight irrespective of the place of sale
or issue and the place of payment of the ticket or passage document;
2. Offshore Banking Units
• An “offshore banking unit (OBU) shall mean a branch, subsidiary, or
affiliate of a foreign banking corporation which is duly authorized by
the BSP to transact offshore banking business in the Philippines.
• Income from foreign currency loans granted to the Philippine residents (other
than OBUs or other depository banks) – 10% final tax
• Interest income from foreign currency interbank deposits – 10% final tax
• Income from foreign currency transactions with non-resident, OBUs, local
commercial banks, and branches of foreign banks authorized to transact
business under the FCDS – Exempt
3. Regional or Area Headquarters, and Regional Operating
Headquarters of Multinationals
• Regional or area headquarters (RHQ) of multinationals shall not be subject to
income tax.
• Regional operating headquarters (ROHQ) shall pay a tax of ten percent (10%)
of their taxable income.
• Any income derived from the Philippine sources by a ROHQ when
remitted to the parent company shall be subject to the tax on branch
profit remittances.
4. Service Contractor/Subcontractor Engaged in Petroleum Operations
• Liable to an eight percent (8%) final tax on gross income derived from
such contract in petroleum operations
• Any income received from all other sources within the Philippines in
the case of foreign subcontractors shall be subject to the regular
income tax under the Tax Code.
5. Ecozone Enterprises and TIEZA-registered enterprises
• Such enterprises availing the preferential 5% GIT shall be taxed at 5%
of gross income from registered activities in lieu of all taxes, national
or local
Non-resident Foreign Corporation Subject to
Special Tax Rates
• In general, a non-resident foreign corporation is subject to a final
withholding tax of 30% based on enumerated gross income from all sources
within the Philippines, except:
• Non-resident cinematographic film owner, lessor, or distributor – 25% of its income
from all sources within the Philippines
• Non-resident owner or lessor of vessels chartered by Philippine nationals – 4 1/2 %
of gross rentals or charter to Filipinos or corporations, as approved by the Maritime
Industry Authority
• Non-resident owner or lessor of aircraft, machineries, and other equipment – 7 ½ %
gross rentals or fees
• Interest on foreign loans contracted on or after August 1, 1986 – 20% of the amount
of interest
• Income from transactions with depository banks under the expanded Foreign
Currency Deposit System – exempt
Exempt Corporation
• The following organizations shall not be taxed under this Title in respect to
income received by them as such:
• (A)  Labor, agricultural or horticultural organization not organized
principally for profit;
• (B)  Mutual savings bank not having a capital stock represented by shares,
and cooperative bank without capital stock organized and operated for
mutual purposes and without profit;
• (C)  A beneficiary society, order or association, operating for the exclusive
benefit of the members such as a fraternal organization operating under
the lodge system, or mutual aid association or a nonstock corporation
organized by employees providing for the payment of life, sickness,
accident, or other benefits exclusively to the members of such society,
order, or association, or nonstock corporation or their dependents;
• (D)  Cemetery company owned and operated exclusively for the
benefit of its members;
• (E)  Nonstock corporation or association organized and operated
exclusively for religious, charitable, scientific, athletic, or cultural
purposes, or for the rehabilitation of veterans, no part of its net
income or asset shall belong to or inure to the benefit of any member,
organizer, officer or any specific person;
• (F)  Business league chamber of commerce, or board of trade, not
organized for profit and no part of the net income of which inures to
the benefit of any private stock-holder, or individual;
• (G)  Civic league or organization not organized for profit but operated
exclusively for the promotion of social welfare;
• (H)  A nonstock and nonprofit educational institution;
• (I)  Government educational institution;
• (J)  Farmers' or other mutual typhoon or fire insurance company,
mutual ditch or irrigation company, mutual or cooperative telephone
company, or like organization of a purely local character, the income
of which consists solely of assessments, dues, and fees collected from
members for the sole purpose of meeting its expenses; and
• (K)  Farmers', fruit growers', or like association organized and
operated as a sales agent for the purpose of marketing the products
of its members and turning back to them the proceeds of sales, less
the necessary selling expenses on the basis of the quantity of produce
finished by them. (Sec. 30, NIRC)
Exercise 1
The JAMILL Corporation provided the following data for the calendar year
ending December 31, 2018 ($ 1 = ₱ 50)
Philippines U.S.A.
Gross Income ₱ 4,000,000 $ 40,000
Deductions ₱ 2,500,000 $ 15,000
Income Tax Paid $ 3,000

a. If it is a domestic corporation, its income tax after tax credit is?

b. If it is a resident foreign corporation, its income tax is?
c. If it is a non-resident foreign corporation, its income tax is?
d. Under letter a, but it opts to claim the tax paid abroad as deduction from
gross income, its income tax is
The JAMILL Corporation provided the following data for the calendar year
ending December 31, 2018 ($ 1 = ₱ 50)
Philippines U.S.A.
Gross Income ₱ 4,000,000 $ 40,000
Deductions ₱ 2,500,000 $ 15,000
Income Tax Paid $ 3,000
a. If it is a resident international carrier, its income tax is?
b. If it is a non-resident cinematographic film owner/lessor, its income tax
is?
c. If it is a non-resident lessor of vessel, its income tax is?
d. If it is a non-resident lessor of aircrafts, machineries and equipment, its
income tax is?
The JAMILL Corporation provided the following data for the calendar
year ending December 31, 2018 ($ 1 = ₱ 50)
Philippines U.S.A.
Gross Income ₱ 4,000,000 $ 40,000
Deductions ₱ 2,500,000 $ 15,000
Income Tax Paid $ 3,000

• If it is a resident foreign corporation but its expenses within and

outside the Philippines is 3,000,000, unallocated (disregard original
data on expense) its income tax is
Exercise 2
• CPA University, a propriety educational institution organized in 2006,
had the following data for 2018.
• Tuition Fees P850,000
• Rental Income (net of 5% cwt) 142,500
• School related expenses 820,000
The Income Tax and Income tax Payable for 2018 is
Minimum Corporate Income Tax
• Who are subject?
• Domestic corporation; and
• Resident foreign corporation.
• Rate and Base
• Two percent (2%) of gross income. The taxpayer shall pay whichever is higher
between the MCIT and the regular corporate income tax (RCIT)
• Effectivity
• The fourth (4th) taxable year immediately following the year in which such
corporation commenced its business
• Carry forward of excess minimum tax
• Any excess of the MCIT over RCIT in a particular year shall be carried forward
and credited against the regular income tax for the three immediately s.
succeeding taxable years.
• Gross income (sale of goods)
• The term gross income shall mean gross sales less sales returns, discounts and
allowances and cost of goods sold. Cost of goods sold shall include all
business expenses directly incurred to produce the merchandise to bring
them to their present location and use.
• Gross income (sale of service)
• In the case of taxpayer engaged in the sale of service, gross income means
gross receipts less sales return, allowances, discount and cost of service. Cost
of services shall mean all direct costs and expenses necessarily incurred to
provide the services required by the customers and clients, including 1)
salaries and employee benefits of personnel, consultants, and specialists
directly rendering the service and 2) Cost of facilities directly utilized in
providing the service such as depreciation or rental of equipment used and
cost of supplies.
Domestic Corporation not subject to MCIT
• The MCIT shall apply only to domestic corporations subject to the regular
corporate income tax (30%). Accordingly, the following shall not be subject to
MCIT
• Domestic corporation operating as proprietary non-profit educational institution subject to
tax at ten percent (10%) on their taxable income;
• Domestic corporation engaged in hospital operations which are non-profit subject to tax at
ten percent (10%) on their taxable income;
• Domestic corporation engaged in business as depository banks under the expanded foreign
currency deposit system, otherwise known as FCDU on their:
• Income from foreign currency transactions with non-residents, offshore banking units in the Philippines,
local commercial banks, including branches of foreign banks, and other depository banks, and
• Interest income from foreign currency loans granted to resident of the Philippines under the expanded
foreign currency deposit system, subject to final tax at ten percent (10%) of such income.
• Firms that are taxed under special income tax regimes such as those PEZA and TIEZA
registered firms availing of the 5% GIT incentive.
• Real Estate Investment Trusts (REIT) – The only corporation which is subject to the 30%
RCIT, but not subject to MCIT.
Resident Foreign Corporation not subject to
MCIT
• The minimum corporate income tax shall apply only to resident foreign
corporation which are subject to the regular income tax (30%). Accordingly,
the MCIT shall not apply to the following
• Resident foreign corporations engaged in business as “international carrier” subject
to tax at 2.5% of their GPB;
• Resident foreign corporations engaged in business as OBUs on their
• Income from foreign currency transactions with non-residents, other offshore banking units,
local commercial banks, including branches of foreign banks, and
• Interest income from foreign currency loans granted to residents of the Philippines, subject to
final tax at 10% of such income.
• Resident foreign corporations engaged in business as regional operating
headquarters subject to tax at 10% of their taxable income;
• Firms that are taxed under special income tax regimes such as those PEZA and
TIEZA-registered firms availing of the 5% GIT incentive.
Relief from the MCIT

• The Secretary of Finance, upon the recommendation of the

Commissioner, may suspend imposition of the MCIT upon submission
of proof that the corporation sustained substantial losses on account
of
• A prolonged labor dispute;
• Because of force majeure;
• Because of legitimate business reverses.
Computation of MCIT

1. Excess MCIT, if any, for the year is computed annually, that is, in the 4th
quarter (annual return)
2. The quarterly tax shall be higher of the RCIT or the MCIT
3. If the quarterly tax due is MCIT, the excess MCIT from previous taxable
years shall not be allowed to be credited. However, creditable withholding
taxes, quarterly income tax payments paid in the previous quarter, and
excess tax credits of the prior year, are allowed as credit against the quarterly
MCIT due.
4. If the quarterly tax due is the RCIT, the excess MCIT from previous taxable
years, creditable tax withheld, quarterly income tax payments paid in the
previous quarters and excess tax credits of the prior year, are allowed as
credits against the quarterly RCIT due.
Exercise
• The records of a domestic corporation organized in 2000 show:
2016 2017 2018
Gross income ₱ 2,000,000 ₱ 3,000,000 ₱ 4,000,000
Other Income:
Capital gain from sale of commercial Land 400,000 500,000
Interest income from bank deposit 80,000 96,000
Capital gain from sale of shares of stock - not listed 60,000 70,000
Allowable deduction 1,940,000 3,100,000 3,500,000
• The income tax payable in 2016 is
• What is the accounting entry for the excess MCIT in 2016?
• The taxable income in 2018 is
• The income tax payable in 2018 is
• What are the accounting entries to properly record the income tax payable
in 2018?
Exercise
1. Normal Income MCIT per Taxes Withheld Excess MCIT
Excess
Quarter Tax per Quarter Quarter per Quarter Prior Year Withholding
Tax Prior Year
First ₱ 100,000 ₱ 80,000 ₱ 20,000 ₱ 30,000 ₱ 10,000
Second 120,000 250,000 30,000
Third 250,000 100,000 40,000
Fourth 200,000 100,000 35,000

a. The income tax due and income tax payable for the 1st quarter?
b. The income tax due and income tax payable for the 2nd quarter?
c. The income tax due and income tax payable for the 3rd quarter?
d. The income tax due and income tax payable for the 4th quarter?
Improperly Accumulated Earning Tax (IAET)
• The IAET is imposed upon the corporation which are formed or
availed for the purpose of avoiding the income tax with respect to its
stockholders or the stockholders of any other corporation by
permitting earnings and profits to accumulate instead of being
divided or distributed.
• The IAET is an additional tax to the regular corporate income tax
imposed on the corporations under Title II of the Tax Code.
Corporations Subject to IAET
• The tax is imposed on improperly accumulated taxable income earned
starting January 1, 1998 by domestic corporations which are classified
as closely-held corporation.
• A branch of a foreign corporation is not liable for the IAET the same
being a resident foreign corporation.
Closely-held Corporations Defined
• These are corporations where at least 50% in value of the outstanding
capital stock or at least 50% of the total combined voting power of all
classes of stock entitled to vote is owned directly or indirectly by or
for not more than 20 individuals.
Corporations Not Subject to IAET
The IAET shall not apply to the following corporations:
• Banks and other non-bank financial intermediaries;
• Insurance companies;
• Publicly-held corporations;
• Taxable partnership;
• General professional partnership;
• Non-taxable joint ventures; amd
• Enterprise duly registered with the TIEZA under RA 9593, the PEZA under RA 7916,
and enterprises registered pursuant to the Bases Conversion and Development Act
of 1992 under RA 7227, as well as other enterprises duly registered under special
economic zones declared by law which enjoy payment of special tax rates on their
registered operations or activities in lieu of other taxes, national or local (Sec. 4,
RR 2-2001)
Circumstances Indicative of Purpose to
Avoid the Tax
• Dealings between the corporation and its shareholders, such as withdrawals by the
shareholder as personal loans;
• Expenditure of funds by the corporation for the personal benefit of the shareholders;
• The investment by the corporation of undistributed earnings in assets having no
reasonable connection with the business;
• Advances in substantial sums made yearly to corporate officers who are at the same time
the stockholders (Basilan Estates vs Commissioner, GRL-22492, Sept 5, 1967)
• Investment of substantial earnings and profits of the corporation in an unrelated business
or in the stock or securities of an unrelated business;
• Investment in bonds and other long-term securities; and
• Accumulation of earnings in excess of 100% of paid-up capital, not otherwise intended for
the reasonable needs of the business.
Proper Accumulation of Profits:
The following constitute accumulation of earnings for the reasonable needs of the business:
• Allowance for the increase in the accumulation of earnings up to 100% of the paid-up capital of the
corporation as of Balance Sheet date, inclusive of accumulations taken from other years;
• Earnings reserved for definite corporate expansion projects or programs requiring considerable
capital expenditure as approved by the Board of Directors or equivalent body;
• Earnings reserved for building, plants or equipment acquisition as approved by the Board of
Directors or equivalent body;
• Earnings reserved for compliance with any loan covenant or pre-existing obligation established
under a legitimate business agreement;
• Earnings required by law or applicable regulations to be retained by the corporation or in respect of
which there is legal prohibition against its distribution;
• In the case of subsidiaries of foreign corporations in the Philippines, all undistributed earnings
intended or reserved for investments within the Philippines as can be proven by corporate records
and/or relevant documentary evidence. (Sec 3, RR No. 2-2001)
Tax Base or Basis of the Tax
• The rate of the IAET is 10%. It is based upon the improperly accumulated taxable income for each taxable year.
Formula:
Current Year’s Taxable Income xxx
Add: Income exempt from tax xxx
Income excluded from gross income xxx
Income subject to final tax xxx
Amount of NOLCO deducted xxx
Less: *Dividends actually or constructively
paid from applicable year’s taxable income (xxx)
*Income Taxes paid or payable for the taxable
year (both income tax in the ITR and final taxes (xxx)
*Amounts reserved for the reasonable needs of
the business from the applicable year’s taxable income (xxx)
IAE XXX
Period for Payment of Dividend/Payment of
IAET
• The dividends must be declared and paid or issued not later than one
(1) year following the close of the taxable year. Otherwise, the IAET, if
any, should be paid within fifteen days thereafter
Exercise
1. The record of a closely-held domestic corporation show the
following data for 2018:
Gross Income ₱ 1,500,000
Business expenses 600,000
Gain on sale of business asset 60,000
Interest on deposits with Metrobank 5,000
Sale of shares of stocks, not listed and traded:
Selling Price 150,000
Cost 115,000
Dividend from Victory Corporation, domestic 35,000
Dividends paid during the year 120,000
Reserved for building acquisition 300,000

In 2017, the corporation suffered an operating loss of P130,000. This

amount was carried forward and claimed as deduction from gross
income 2018. The income tax due in 2018 is? The IAET is?
Special Income Taxes
The Tax Code presently has two types of special income taxes, namely the branch profits remittance tax, and the
gross income tax.
Branch Profits Remittance Tax (BPRT)
• Transaction subject – Any profit remitted by a branch of a foreign corporation to its head office (Sec 28 (A) (5),
NIRC)
• This includes any income derived from Philippine sources by the Regional Operating Headquarters of a
multinational corporation when remitted to the parent company
• Rate and Base – Fifteen percent (15%) of the total profits applied or earmarked for remittance (gross of the
BPRT), except those activities which are registered with the
• PEZA;
• Subic Bay Metropolitan Authority (SBMA);
• Clark Development Authority (CDA);
• TIEZA
• Income not treated as branch profits – Income which are not connect with the trade or business in the
Philippines shall not be treated as “branch profts”
• Tax treaties – The 15% rate may be reduced by international treaties to which the Philippines is a signatory
The JAMILL Corporation provided the following data for the calendar
year ending December 31, 2018 ($ 1 = ₱ 50)
Philippines U.S.A.
Gross Income ₱ 4,000,000 $ 40,000
Deductions ₱ 2,500,000 $ 15,000
Income Tax Paid $ 3,000

• If it is a resident foreign corporation and it remitted 60% of its net

profit to its head office abroad, its BPRT is?
• What is the total tax liability?
Gross Income Tax
• Under Section 27(A) of the Tax Code, the President, upon recommendation of the Secretary of Finance, may
allow corporations the option to be taxed at fifteen percent (15%) of gross income as defined in the Tax Code
instead of the 30% net income tax.
• Corporation given the option – The option is available to domestic and resident foreign corporation
• Requisites:
• A tax ratio effort of twenty percent (20%) of Gross National Product (GNP);
• A ration of forty percent (40%) of income tax collection to total tax revenues;
• A VAT tax effort of four percent (4%) of GNP; and
• A 0.9 percent (0.9%) ratio of the Consolidated Public Sector Financial Position (CPSFP) to GNP.
• Additional requisite – the option shall be available only to firms whose ratio of cost of sales to gross sales or
receipts from all sources does not exceed 55%.
• Period of irrevocability – The election of the gross income tax option by the corporation shall be irrevocable for
three (3) consecutive taxable years during which the corporation is qualified under the scheme.
• Rate and base – Fifteen percent (15%) of gross income where gross income shall be equivalent to gross sales
less sales return, discounts, and allowances and cost of goods sold.
• A died on January 2, 2016, survived by his wife and four qualified
dependent children. He left a net estate of P80,000,000 which is in
the hands of an executor. In 2016, 2017 and 2018, the estate had
identical gross receipts of P7,000,000, cost of sales of P4,000,000 and
business expenses of P2,200,000. The net taxable incomes of the
estate in 2016, 2017 and 2018 are?