Income Taxation

CHAPTER 14
Problem 14-1 True or False
1. A penalty shall be impose on !ithholin" tax a"ent #or #ailure to !ithhol the tax.
$. Taxes are !ithhel at source to #acilitate tax collection.
%. &ner the #inal !ithholin" tax system' the income tax !ithhel is the #ull an #inal income tax ue #rom
the payee.
4. &ner the !ithholin" tax system' the income tax payee is not re(uire to #ile an income tax return #or the
particular income on !hich the #inal tax has been !ithhel.
). Taxes !ithhel on income payments co*erin" the expane !ithholin" taxes an #inal !ithholin" taxes
are creitable in nature.
+. The taxes !ithhel #rom compensation o# employees o# o##shore ban,in" units shoul #ile income tax
returns to the -IR.
.. All income earne by persons are sub/ect to holin" tax.
0. Remuneration #or casual labor not in the course o# employer1s trae or business is not sub/ect to holin"
tax.
2. 3o !ithholin" tax shall be re(uire !here the total compensation income o# an ini*iual in a year oes
not excee sixty thousan pesos.
14. The employee !ho opts to #ile the income tax return shll #ile the same not later than April 1) o# the year
immeiately #ollo!in" the taxable year.
11. In "eneral' any /uriical person' !hether or not en"a"e in business or trae is re(uire to !ithhol tax on
income payments.
1$. 5o*ernment o##ices are not constitute as !ithholin" tax a"ents.
1%. The obli"ation o# the pay or to !ithhol tax arises at the time an income is pai or payable.
14. The !ithholin" o# creitable !ithholin" taxes shall not apply to income payments mae to national
"o*ernment an its instrumentalities.
1). -usiness establishments !hose !ithholin" taxes amount to one million pesos are consiere lar"e
taxpayers.
Problem 14-$ Amount to Recei*e' 3et o# 6ithholin" Tax
7 is an unmarrie person an a partner in a "eneral pro#essional partnership #or a )48 interest. The partnership
earne P)44' 444 income an istribute to partners. Ho! much shoul partner 9 recei*e' net o# !ithholin" tax:
a. P4)4'444 c. P$$)'444
b. P$)4'444 . P$1$'444
Problem 14-% Amount to be Pai' 3et o# 6ithholin" Tax
A nonresient #orei"n corporation is a holer o# 14'444 shares o# 9' a stoc,holer o# recor. Ho! much shoul be
pai to the nonresient #orei"n corporation' net o# !ithholin" tax:
a. P2)'444 c. P04'444
b. P24'444 . P.4'444
Problem 14-4 Amount to be Pai' 3et o# 6ithholin" Tax
A Philippines 3ational chartere a #orei"n *essel o# nonresient less or #or P)44' 444. Ho! much shoul be pai to
nonresient less or' net o# !ithholin" tax:
a. P4)4' 444 c. P4..' )44
b. P4+$' 444 . P)44' 444
Problem 14-) 3et Payment' 3et o# 6ithholin" Tax
A tax in#ormer earne P1' 444' 444 re!ars. Ho! much shoul be pai to the tax in#ormer' net o# !ithholin" tax:
a. P2)4' 444 c. P0)4' 444
b. P244' 444 . P044' 444
Problem 14-+ Comprehensi*e Problem
The #ollo!in" income are earne urin" the taxable year $44x;
1. Interest on the ban, eposits;
a. Peso eposits P )4'444
b. <ollar account =FC<>? @ 14'444
$. PriAe P144'444
%. Royalties on boo,s P%44'444
4. Capital "ains B sale o# real property
=ac(uisition cost' P044'444? P$44' 444
). Property i*iens P1$4' 444
+. Compensation #rom o##shore ban,in" units P444'444
Re(uire; Computer the #inal !ithholin" tax at source i# the income payee is a;
a. Resient CitiAen or Resient Alien.
b. 3onresient Alien en"a"e in business.
c. 3onresient Alien not en"a"e business.
. <omestic Corporation =except 3os. $ an +?.
e. Resient Forei"n Corporation =except 3os. $' 4 an +?.
#. 3onresient Forei"n Corporation =except 3os. $' 4 an +?.
CHAPTER 1%
Problem 1%-1 True or False =Partnerships?
6rite True i# the statement is correct or False i# the statement is incorrect.
1. All partnerships are taxe in the same manner as corporation.
$. A "eneral pro#essional partnership is not re(uire to #ile its annual income tax return.
%. The share o# a partner in the "eneral pro#essional partnership is sub/ect to #inal !ithholin" tax o# 148 i#
the amount is belo! P.$4' 444.
4. The income o# "eneral commercial partnership is also sub/ect to CCIT or 3ormal Corporate Tax
!hiche*er applicable.
). I# the amount to be istribute to partner o# a "eneral pro#essional partnership is more than P.$4' 444' it is
to be !ithhel !ith 1)8 creitable tax.
+. The istribute share o# a partner in a commercial partnership is sub/ect to #inal tax 148.
.. I# the only source o# income o# the partner is his share in a "eneral commercial partnership' he is no lon"er
re(uire to #ile the annual income tax return.
0. The share o# partnership in the "eneral pro#essional partnership is taxable in the con*entional manner o#
computin" the normal income tax o# ini*iual.
2. A partnership that eri*es income primarily #rom pro#essional #ee an also en"a"es in train" business as
seconary source o# income is to be classi#ie as "eneral pro#essional partnership.
14. <i*ien income earne by "eneral commercial partnership is no lon"er taxable a"ainst the partner upon its
istribution as share o# the partner.
11. 5enerally' co-o!nership income is not taxable.
1$. The income o# co-o!nership that is istribute to the bene#iciary is sub/ect to 148 !ithholin" tax i# less
than P.$4' 444 per year.
1%. Co-o!nership' !hich exists #or more than 14 years' is sub/ect to income tax in the same manner as "eneral
commercial partnerships.
Chapter 1% Income Taxes o# Partnerships' Estates an Trusts
Problem 1%-$ True or False =Income o# estateDTrusts?
6rite True i# the statement is correct or False is the statement is incorrect.
1. A trust a ri"ht o# property' real or personal' hel by one party #or the bene#it o# another.
$. The creation o# trusts may be either expresse or implie.
%. A trustee is the person !ho establishes a trust.
4. Each bene#iciary must inclue in his return his istributi*e share o# the net income o# the trust.
). The tabular rates o# tax prescribe uner >ection $4 =A? #or ini*iuals shall be use in computin" the
income tax o# trusts or estates.
+. The amount o# trust1s income #or istribution to bene#iciary' allo!e as a euction #rom trust1s taxable
income shall be inclue in computin" the taxable income o# the bene#iciaries !hether istribute to them
or not.
.. Estate an trusts are treate as separate taxable entities.
0. The exemption allo!e to estate or trust is P$)' 444.
2. In the case o# t!o or more trusts create by the same person #or the same bene#iciary' the taxable income o#
all trusts shall be consoliate an the tax shall be compute base on the consoliate income.
14. A bene#iciary o# an estate en"a"e in business has the status o# sel#-employe ini*iual taxpayer.
11. The computation o# the net taxable income o# the estate is the same manner as ini*iual taxpayer' except
that the personal exemption is limite to P$4' 444.
1$. The income tax o# irre*ocable trust is taxable in the same manner as o# the income o# the estate.
Problem 1%-% Cultiple Choice
>elect the letter that contains the best ans!er.
1. >tatement 1; Pro#essional #ee is the primary source o# "eneral pro#essional partnership1s income
>tatement $; Train" acti*ities are also sources o# "eneral pro#essional partnership.
a. Enly statement 1 is correct.
b. Enly statement no. $ is correct.
c. -oth statements are correct.
. -oth statements are not correct.
$. >tatement 1; A "eneral pro#essional partnership is exempt #rom income tax an as such is not re(uire to
#ile its income tax return.
>tatement $; The share o# partners in the "eneral pro#essional partnership is sub/ect to income tax rate #or
ini*iual.
a. Enly statement 1 is correct.
b. Enly statement $ is correct.
c. -oth statements are correct.
. -oth statements are not correct.
%. >tatement 1; A "eneral commercial partnership is taxe the same manner as a omestic corporation.
>tatement $; A "eneral commercial partnership that is reportin" an operatin" loss on its )
th
year o#
operation is still liable to pay its annual income tax #or such year.
a. Enly statement 1 is correct.
b. Enly statement $ is correct.
c. -oth statements are correct.
. -oth statements are not correct.
4. >tatement 1; The istributi*e share o# "eneral commercial partnership is sub/ect to #inal !ithholin" tax o#
148.
>tatement $; The istributi*e share o# a "eneral pro#essional partnership is sub/ect to creitable !ithholin"
tax o# 148.
a. Enly statement 1 is correct.
b. Enly statement $ is correct.
c. -oth statements are correct.
. -oth statements are not correct.
). The share o# partners #orm the net income o# a pro#essional partnership is sub/ect to
a. Final tax o# 148.
b. Creitable !ithholin" tax o# 148.
c. Creitable !ithholin" tax 1)8.
. Tax-exempt.
+. A pro#essional partnership en"a"e in the practice o# pro#ession an train" o# "oos is sub/ect to
a. 148 tax base on "ross income.
b. $)8 tax base on net taxable income.
c. %48 tax base on net taxable income.
. Tax-exempt.
.. The "ross receipts o# a pro#essional entertainers is sub/ect to a 148 creitable !ithholin" tax i# hisDher
income urin" the year
a. Excees P.$4' 444.
b. Is P.$4' 444 an belo!.
c. Is P1' 444' 444 an abo*e.
. 3one o# the abo*e.
0. The "eneral pro#essional partnership is not sub/ect to income tax' but is re(uire to #ile a return in orer to
a. Pro*ie in#ormation re"arin" the business acti*ities o# the partnership.
b. Pro*ie in#ormation re"arin" the share o# the partners in the net income o# the partnership to be
inclue in their tax return.
c. Comply !ith the re(uirements o# the >ecurities an Exchan"e Commission.
. Comply !ith the re(uirements o# the taxin" a"ency.
2. The net income recei*e by a partner o# a "eneral co-partnership is sub/ect to
a. A corporate tax.
b. A #inal tax on i*iens.
c. An ini*iual normal tax.
. A capital "ains tax.
14. >tatement 1; The creitable !ithholin" tax on the partner1s share #rom the income o# a pro#essional
partnership is 1)8 i# the partner1s share exceee P.$4' 444 per year.
>tatement $; The amount recei*e by the partner as his share in the "eneral commercial partnership is
sub/ect to a creitable !ithholin" tax o# 148.
a. Enly statement 1 is correct.
b. Enly statement $ is correct.
c. -oth statements are correct.
. -oth statements are not correct.
Problem 1%-4 Cultiple Choice
>elect the letter that contains the best ans!er.
1. >tatement 1; The income o# co-o!ne inheritance is tax exempt.
>tatement $; The share o# the co-o!ner in the income o# co-o!nership is also exempt #rom income tax.
a. Enly statement 1 is correct.
b. Enly statement $ is correct.
c. -oth statements are correct.
. -othe statements are not correct.
$. 6hich o# the #ollo!in" co-o!nership is sub/ect to income tax:
a. Income o# *oluntarily establishe co-o!nership.
b. Income o# co-o!ne property ac(uire as inheritance.
c. Income o# co-o!ne property ac(uire as onation.
. Income o# "eneral pro#essional partnership.
%. >tatement 1; A co-o!nership that exists #or more than 14 years is exempt #rom income tax.
>tatement $; The share o# co-o!ners #rom tax-exempt co-o!nership is taxable a"ainst the co-o!ners.
a. Enly statement 1 is correct.
b. Enly statement $ is correct.
c. -oth statements are correct.
. -oth statements are not correct.
4. >tatement 1; Income o# co-o!nership per a"reement is taxable.
>tatement $; The share o# the co-o!ner o# coFo!nership is also exempt #rom income tax.
a. Enly statement 1 is correct.
b. Enly statement $ is correct.
c. -oth statements are correct.
. -oth statements are not correct.
). The portion o# income #rom irre*ocable trust that !oul be istribute urin" the year is taxable a"ainst
the.
a. 5rantor. c. -ene#iciary.
b. Trustee. . Trust.
+. >tatement 1; The income o# the unistribute estate is sub/ect to income tax.
>tatement $; The income o# the estate is compute the same manner as a "eneral commercial partnership.
a. Enly statement 1 is correct.
b. Enly statement $ is correct.
c. -oth statements are correct.
. -oth statements are not correct.
.. >tatement 1; The income o# the estate istribute to the bene#iciary urin" the year is sub/ect to #inal tax o#
1)8.
>tatement $; The !ithholin" tax on the income istribute to bene#iciary is creitable a"ainst the total tax
liability o# the bene#iciary.
a. Enly statement 1 is correct.
b. Enly statement $ is correct.
c. -oth statements are correct.
. -oth statements are not correct.
0. 6hich o# the #ollo!in" statements is not correct:
a. An irre*ocable trust is sub/ect to income tax.
b. The taxable trust is taxe the same manner as ini*iual taxpayer.
c. The taxable trust is allo!e to claim P)4' 444 personal exemptions.
. The taxable trust is taxe at %48 o# net taxable income.
2. >tatement 1; -oth re*ocable an irre*ocable trusts are taxable #or their income earne.
>tatement $; The income o# re*ocable trust is taxable a"ainst the "rantor.
a. Enly statement 1 is correct.
b. Enly statement $ is correct.
c. -oth statements are correct.
. -oth statements are not correct
14. >tatement 1; The "rantor is liable #or the income o# a re*ocable trust.
>tatement $; A re*ocable trusts exist !hen the "rantor o# the trust.
po!er to chan"e at any time any part o# the terms o# the trust.
a. Enly statement 1 is correct.
b. Enly statement $ is correct.
c. -oth statements are correct.
. -oth statements are not correct.

11. >tatement 1; The income o# the estate istribute to the bene#iciary
<urin" the year is sub/ect to #inal tax o# 1)8
>tatement $; The !ithholin" tax on the income istribute to
bene#iciary is creitable a"ainst the total tax liability o# the
bene#iciary.
a. Enly statement 1 is correct
b. Enly statement $ is correct
c. -oth statements are correct
. -oth statement are not correct
Problem 1%-) Co- Partnership
In $44x' CitAi an E"ar reporte a partnership net pro#it #rom train" amountin" to P444' 444. Ether items o#
income not inclue in the net pro#it are interest income o# P444' 444' net o# #inal !ithholin" tax' an i*ien
income #rom <omestic Corporation o# P14' 444. The income tax on the istributi*e share o# CitAi !ho shares pro#it
an loss e(ually !ith E"ar in the earnin" o# the partnerships.
a. P14' .44. c. P14' 4.+.
b. P14' %44. . P 1%' +44.
Problem 1%-+ Co- Partnership
A an - #orme a train" partnership as partners sharin" pro#it an loss at 1;1. <urin" the taxable year' the "ross
pro#it o# the partnership amounte to P444' 444 an business expenses incurre amounte to P1+4' 444G cost o#
sale o# P$44' 444.
1. The income tax o# the partnership is
a. P1%)' 444. c. P.$' 444.
b. P14)' 444. . P1)' 444.
$. Ho! much is the istributable share o# partner A' net o# #inal tax:
a. P.)' +44. c. P14$' 444
b. P10%' 444. . P0.' .)4
Problem 1%-. 5eneral Pro#essional Partnership
H' marrie' !ith an unemploye !i#e an one (uali#ie epenent chil' an R' sin"le' are partners in H' R'' Co.' a
"eneral pro#essional partnership. They are sharin" pro#its an losses as #ollo!s; H B .48 an R B %48. For the
calenar year ene $44x' the income an expenses o# the partnership an the income an expenses o# the personal
accounts o# the partner are as #ollo!s;
H' R' I Co. Personal H Accounts R
5ross income P%$)' 444 P0)' 444 P+)' 444
Expenses;
Allo!able euctions 1.)' 444 %)'444 1)'444
Charitable contributions 1)' 444 1'.)4 +$4
<ra!in" by H an R #rom the
Partnership urin" the year =%2' 444? $4' 444 1)' 444
1. The taxable net income o# H' i# he opte #or itemiAe euction is
a. P +.' .)4. c. P14$' .)4.
b. P140' $)4. . P1))' 444.
$. The taxable net income o# R' i# he opte #or optional stanar euction is
a. P11$' )44. c. P..' )44.
b. P 2.' )44. . P4.' )44.
Problem 1%- 0 5eneral Pro#essional Partnerships
-lac, an 6hite partnership reporte #or year $44x a net pro#essional income amountin" to P444' 444. Cr. -lac, is
sin"le an has compensation income o# P$44' 444 his other income' net o# #inal !ithholin" taxes are interest o# P4'
444 an i*ien income o# P14' 444.
The net taxable income per annual ITR o# -lac, !ho shares pro#it an loss e(ually !ith 6hite in the earnin"s o# the
partnership is
a. P4$4' 444 c. P%24' 444
b. P444' 444 . P%+4' 444
Problem 1%-2 Co-o!nership
In $44x' Robert an Annie inherite a plantation #orm their Aunt' Cherry. <urin" the year' the property has net
earnin"s a#ter itemiAe expenses !as P%' 444' 444 o# !hich P1' 444' 444 each !as recei*e by Robert an Annie.
1. Ho! much is the income tax o# the earnin"s #rom the plantation:
a. P%$4' 444 c. P$0)' 444
b. P2+4' 444 . P B 4 B
$. Assumin" that Robert is sin"le' ho! much is his taxable income in his share #rom the co-o!nership:
a. P1' 444' 444 c. P 004' 444
b. P 2)4' 444 . P - 4 B
Problem 1%- 14 Irre*ocable Trust
<urin" the year' the amount o# income o# irre*ocable trust that !as istribute to heir amounte to P0)' 444' net o#
creitable !ithholin" tax. The trust income a#ter expenses but be#ore euctin" the income istribute to heir !as
p444' 444.
The net taxable income o# trust is
a. P444' 444. c. P$2)' 444
b. P%04' 444. . P$)4' 444
Problem 1%- 11 Comprehensi*e =Trust?
The #ollo!in" ate is a*ailable #or the income an expenses o# the "rantor' the trusts an the bene#iciary #or the year
$44x;
Earner Income Expenses
5rantor P1' 444' 444 P444' 444
Trust A )44' 444 $44' 444
Trust - $44' 444 144' 444
-ene#iciary 144' 444 44' 44
1. &ner the assumption that income earne #rom trust A is re*ocable an - is Irre*ocable' the net income o#
the "rantor be#ore personal exemption is
a. P +44' 444. c. P1' 444' 444.
b. P 244' 444. . P1' 144' 444.
$. -ase on the "i*en ata income o# all the trust a#ter exemption is
a. P444' 444. c. P144' 444.
b. P%04' 444. . P )4' 444.
%. Assume #urther that P)4' 444 o# the income o# trust - !as istribute to the bene#iciary' the net taxable
income o# bene#iciary' a#ter personal exemption is
a. P1)4' 444. c. P +4' 444.
b. P114' 444. . P 44' 444.
Problem 1%- 1$ 5eneral pro#essional partnership has #ollo!in" ata #or $44x;
5ross income P1' $44' 444
<euctions;
>alary o# A $44' 444
>alary o# - %+4' 444
Ether business expenses 144' 444
Pro#it an loss istribution;
Partner A' +48' sin"le' pro*iin" #ull support to his mother.
Partner -' le"ally separate !ith $ (uali#ie epenent chilren.
Re(uire; Compute #or the tax liability o#;
1. The partnership
$. Partner A
%. Partner -
Problem 1%- 1% Co B Partnership
C6' a re"istere "eneral co - partnership' ha the #ollo!in" ata #or $44x;
5ross income #rom merchanisin" P).)' 444
<i*iens recei*e #rom omestic corporation 44' 444
<i*iens recei*e #rom nonresient #orei"n corporation +4' 444
Interest income' net o# $48 #inal tax 14' 444
Erinary an necessary business expenses $))' 444
<ata #or the partners; C 6
Participation 448 >in"le
Re(uire; Compute the income tax ue o# C an 6.
Problem 1%- 14 Co-o!nership
In 1202' 5race Ann >ubala an Car/orie >ison recei*e a plantation #rom their aunt E*elyn Para"as. Thus cousin
continue to maintain the plantation. In $44x' the net income o# the plantation is P)'444' 444 o# !hich P1'444' 444
each !as recei*e by 5race an Car/orie be#ore euctin" the applicable !ithholin" tax.
Re(uire;
1. Compute the income tax ue an payable o# the co-o!nership.
$. Compute the !ithhel #rom the share o# Car/orie >ison.
%. Compute the income tax an payable o# 5race Ann >ubala usin" the normal tabular tax.
Problem 1%-1) Income o# Estate
Cr. 5eral -a"uin"an' ie on Hanuary 4' $44x' lea*in" a con/u"al estate o# P$4' 444' 444 to his !i#e' CitAi. The
heirs are still in /uicial testamentary proceein"s #or the settlement o# estate.
In $44x' the estate realiAe a "ross income #rom business amountin" to P)' 444' 444 an relate business expenses is
448 o# "ross income. The aministrator istribute the #ollo!in" amount to the chilren bene#iciaries o# Cr.
-a"uin"an.
a. Crs. <iana 3ie*era' marrie !ith 4 (uali#ie
epenent chilren' !ith compensation income o#
P$)4' 444 P$44' 444
b. Alona' sin"le ' 10 years ol $44' 444
c. Crs. 5race Cicu' marrie an unemploye $44' 444
Total income istribute to the bene#iciaries P)44' 444
The relate !ithholin" taxes !ere mae on the amount recei*e the chilren bene#iciaries.
Re(uire; Compute #or the #ollo!in";
1. Income tax ue o# Cr. -a"uin"an1s estate #or $44x.
$. Income tax still ue an payable o# Crs. <iana 3ie*era #or $44x.
%. Total !ithholin" taxes on the amount recei*e by the chilren bene#iciaries.
Problem 1% B 1+ Tax >a*in"s
3aty Poc ie in 3o*ember 1' $44x. Jala"' her husban' sur*i*e her. &pon her eath' her exclusi*e estate inclues
a business income o# P)44' 444 earne urin" year $44x. The business expenses #or year $44x amounte to
P$44'444. 3aty1s estate !as mana"e by an aministrator.
A year #ollo!in" the eath o# 3aty Poc' the estate1s income an expenses amounte to P044' 444 an $+4' 444'
respecti*ely.
The estate has not been trans#erre to Jala" !hen the income !as earne. Jala" also earne business income o#
P%44' 444 an incurre business expenses o# P104' 444 urin" the same year.
Re(uire; Ho! much !oul be the tax sa*in" i# the aministrator o# the estate !oul istribute p1)4' 444 income o#
the estate to ,ala":
Problem 1%-1. Taxable Income o# Trust an -ene#iciary
In Hanuary $' $44x' Cr. Hames -otin" establishe a trust #or the bene#it o# his au"hter Huniper -otin"' a"e 1$
years ol. The properties establishe as trust are as #ollo!;
House an lot !ith an annual income o# P 04' 444
Hollo! bloc, business !ith a monthly income o# 14' 444
Farm !ith an annual income o# )4' 444
Re(uire; I# the trust is irre*ocable trust' compute #or the #ollo!in";
1. Income tax payable by the trust in $44x.
$. Income tax ue #rom the bene#iciary in $44x.
Problem 1%-10 Irre*ocable T!o Trusts
Car, Kla"uno' a trust or' create t!o irre*ocable trusts #or his son. The reporte earnin"s o# each trust #or year $44x
are as #ollo!s;
a. Trust 1; 3et income be#ore exemption' a#ter P14' 444 istributions to bene#iciary urin" the year' P44' 444.
b. Trust $; 1' 444' 444 incomes be#ore exemption' an istribution to bene#iciary amountin" to P$4' 444.
Re(uire; I# the relate !ithholin" taxes !ere mae urin" the year' ho! much is the income tax still ue an
payable #or the t!o trusts:
Problem 1%-10- Tax Plannin"
Cr. 3abia"' sin"le' !ith a epenent a #urther' ie in 3o*ember 1' $442.
His estate has a "ross business receipt o# P%44' 444 urin" the year $442.
Re(uire;
1. Ho! much !oul be the net income o# the estate sub/ect to income tax:
$. I# a year #ollo!in" the eath o# Cr. 3abia"' his estate1s "ross business receipts amounte to P)44' 444' an
his estate has not 'been trans#erre to his #ather. Assume #urther that his #ather has a "ross business receipts
o# his o!n amountin" to P$44' 444' Ho! much !oul be the tax sa*in" i# the aministrator o# the estate
!oul istribute P1)4' 444 income o# the estate to 3abia"1s #ather:
Problem 1%-12 Tax Plannin"
<o,lin" earns an annual "ross income o# P444' 444 #rom his business be#ore euctin" the operatin" expense
a*era"in" to P144' 444 per year. Eut o# his earnin"s' he is "i*in" P144' 444 as yearly allo!ance to his son.
Re(uire;
1. &sin" a better !ay to minimiAe income tax' !hat e*ice coul <o,lin" use to lo!er his income tax.
$. I# )48 o# his business !ill be put in an irre*ocable trust in #a*or o# his son !ho is marrie' ho! much
!oul be his annual tax sa*in"s:
Problem 1%-$4 Tax Plannin"
Cr. A' marrie' recei*es an annual income #rom his t!o properties as #ollo!s;
Total Property 1 Property $
Rent income P044' 444 P)44' 444 P%44' 444
<epreciation expense P$44' 444 P1)4' 444 P 24' 44
Re(uire;
1. Applyin" the tax minimiAation principle' ho! much is the income tax ue o# Cr. A.
$. I# Property 3o. 1 !oul be hel in irre*ocable trust #or any o# his bene#iciaries' hoe much is the amount o#
tax sa*in"s:
Problem 1%-$1 Hoint Lenture
9 Co. an 7 Co.' both omestic corporations' #orm a /oint *enture to construct a builin" !ith a constract price
incluin" 1$8 LAT amountin" to P11$' 444' 444.
The total cost o# construction amounte to P.$' 444' 444 incluin" 1$8 LAT. Eperatin" expenses relate to the
/oint *enture amounte to P1)' 444' 444.
The corporation a"ree to share any income losses e(ually.
Re(uire; Compute the relate taxes o# the /oint *enture an /oint *enture partners assumin" that the construction is
1. 3ot a "o*ernment pro/ect.
$. A "o*ernment pro/ect.
Re(uire 1%-$$ Hoint Lenture
A Co. an - Co.' both omestic corporations' #orm a /oint *enture to construct a builin" !ith a contract price
incluin" 1$8 LAT amountin" to P02' +44' 444.
The total cost o# construction amounte to P)+' 444' 444 incluin" 1$8 LAT. Eperatin" expenses relate to the
/oint *enture amounte to P14' 444' 444.
The corporations a"ree to share any income or losses e(ually.
Re(uire; Compute the relate taxes o# the /oint *enture an the /oint *enture partners assumin" that the
construction is
1. 3ot a "o*ernment pro/ect.