PROBLEM SOLVING_TAX_WEEK2_POSTTEST
Ana, a self-employed resident citizen provided the following data for 2018 taxable year:
Sales P 2,800,000
Cost of sales 1,125,000
Business expenses 650,000
Interest income from peso bank deposit 80,000
Interest income from bank deposit under FCDS 120,000
Gain on sale of land in the Philippines held as
capital asset with cost P1.5M when zonal is P1.2M 500,000
1.Assuming Ana is a VAT-registered taxpayer, how much is her total income tax expense
assuming she opted to be taxed at 8% income tax rate? *
2.How much is the total income tax expense of Ana for the year? *
3.How much is the total income tax of Ana assuming she opted to be taxed at 8%? *
4.Using the same date except that her gross sales for the year was P3.8M, how much is her total
income tax expense assuming she opted to be taxed at 8% income tax rate? *
Answer & Explanation
1. 351,500
2. 351,500
3. 358,000
4. 652,000
Step-by-step explanation
1. A VAT registered taxpayer can't opt to be taxed at 8%. He/she shall still be liable to graduated
tax rates.
Sales P2,800,000
(Cost of sales) (1,125,000)
(Business expenses) (650,000)
Net Income 1,025,000
Basic Income Tax 197,500
Basic Income Tax 197,500
Final income tax on Interest income from peso bank deposit (80,000 x 20%) 16,000
Final income tax on Interest income from bank deposit under FCDS (120,000 x 15%) 18,000
CGT on real property (2,000,000 x 6%) 120,000
Income tax expense 351,500
2. Same solution to #1.
3.
Gross sales P2,800,000
(Tax exempt income) (250,000)
Taxable net income 2,550,000
Multiply to: tax rate 8%
Tax due 204,000
Basic income tax 204,000
Final income tax on Interest income from peso bank deposit (80,000 x 20%) 16,000
Final income tax on Interest income from bank deposit under FCDS (120,000 x 15%) 18,000
CGT on real property (2,000,000 x 6%) 120,000
Total income tax expense 358,000
4.
Sales P3,800,000
(Cost of sales) (1,125,000)
(Business expenses) (650,000)
Taxable Net Income 2,025,000
Basic Income Tax 498,000
Basic Income Tax 498,000
Final income tax on Interest income from peso bank deposit (80,000 x 20%) 16,000
Final income tax on Interest income from bank deposit under FCDS (120,000 x 15%) 18,000
CGT on real property (2,000,000 x 6%) 120,000
652,000
NOTE: ANA exceeded the 3M threshold, she is now a VAT registrable person not eligible for
8% tax.
