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Income Taxation Problems With Answers

The document outlines various income taxation problems and their solutions under Philippine tax laws, including the TRAIN and CREATE laws. It covers individual income tax calculations, taxable vs non-taxable benefits, corporate income tax, minimum corporate income tax, capital gains tax, and estate tax. Each problem is presented with a specific scenario, followed by the tax computation and the final tax due.

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441 views3 pages

Income Taxation Problems With Answers

The document outlines various income taxation problems and their solutions under Philippine tax laws, including the TRAIN and CREATE laws. It covers individual income tax calculations, taxable vs non-taxable benefits, corporate income tax, minimum corporate income tax, capital gains tax, and estate tax. Each problem is presented with a specific scenario, followed by the tax computation and the final tax due.

Uploaded by

moymoythegreat1
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Income Taxation Problems with

Answers
1. Individual Income Tax – Compensation Income
Problem:
Mr. Cruz earns ₱50,000 monthly as a regular employee. He has no other income. How much
is his annual income tax due using the TRAIN Law (Philippines)?

Answer:
Annual income: ₱50,000 × 12 = ₱600,000
Tax Computation (TRAIN):
- First ₱250,000 = 0%
- Next ₱350,000 (₱600,000 - ₱250,000): taxed at 20% = ₱70,000
Tax Due: ₱70,000

2. Individual – Mixed Income Earner


Problem:
Ms. Dela Cruz earns ₱300,000 from her job and ₱250,000 from freelancing. What is her
total tax due?

Answer:
Total Income = ₱550,000
Under TRAIN Law:
- First ₱250,000 = 0%
- Next ₱300,000 = 20% = ₱60,000
Tax Due: ₱60,000

3. Taxable vs Non-taxable Benefits


Problem:
Mr. Reyes received a 13th month pay of ₱120,000. What portion is taxable?

Answer:
Under TRAIN Law, 13th month pay is tax-exempt up to ₱90,000.
Taxable portion: ₱120,000 - ₱90,000 = ₱30,000
4. Fringe Benefit Tax (FBT)
Problem:
A manager receives a company car valued at ₱500,000 for personal use. How much is the
Fringe Benefit Tax?

Answer:
Assuming 100% personal use:
- GMV = ₱500,000 / (1 - 0.35) = ₱769,231
- FBT = ₱769,231 × 35% = ₱269,231
Fringe Benefit Tax: ₱269,231

5. Allowable Deductions – Optional Standard Deduction (OSD)


Problem:
A sole proprietor has gross sales of ₱1,000,000. She opts for 40% OSD. What is her taxable
income?

Answer:
OSD = 40% × ₱1,000,000 = ₱400,000
Taxable income = ₱1,000,000 - ₱400,000 = ₱600,000

6. Corporate Income Tax


Problem:
A domestic corporation has net taxable income of ₱2,000,000. What is its corporate income
tax under CREATE Law?

Answer:
Corporate Income Tax (small corporations): 20%
Tax Due: ₱2,000,000 × 20% = ₱400,000

7. Minimum Corporate Income Tax (MCIT)


Problem:
XYZ Corp. has gross income of ₱3,000,000 and taxable income of ₱50,000. What is the
MCIT?

Answer:
MCIT = 1% of gross income = ₱3,000,000 × 1% = ₱30,000
Regular tax = ₱50,000 × 20% = ₱10,000
Pay higher of the two → MCIT: ₱30,000
8. Capital Gains Tax – Sale of Shares (not traded)
Problem:
Mr. Tan sold unlisted shares for ₱1,000,000. He acquired them at ₱600,000. What is the
capital gains tax?

Answer:
Gain = ₱1,000,000 - ₱600,000 = ₱400,000
Tax rate = 15%
Tax Due: ₱400,000 × 15% = ₱60,000

9. Capital Gains Tax – Real Property Sale


Problem:
Mrs. Santos sold a house for ₱2,500,000. What is the capital gains tax?

Answer:
Capital Gains Tax = 6% of selling price = ₱2,500,000 × 6%
Tax Due: ₱150,000

10. Estate Tax


Problem:
A deceased person has a net estate of ₱6,000,000. What is the estate tax?

Answer:
Estate tax rate: 6%
Tax Due: ₱6,000,000 × 6% = ₱360,000

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