For Classroom Discussion – MCIT
PROBLEM No. 1:
A corporation subject to MCIT reported the following for 2023:
Gross sales P 1,750,000
Sales discounts & allowances 50,000
Sales returned 30,000
Interest income from bank deposits 25,000
Rental income from vacant premises 50,000
Beginning inventory 300,000
Gross purchases 800,000
Net freight on purchases 30,000
Purchase discounts and allowances 45,000
Purchases returned to suppliers 60,000
Ending inventory 150,000
Required: Compute the Minimum Corporate Income Tax (MCIT) using 2%.
PROBLEM No. 2:
A foreign corporation had the following data in 2023, its fourth year of operation:
Sales, net of discounts and allowances P 2,500,000
Cost of goods sold 1,630,000
Gain on sale of machinery 75,000
Dividend income from domestic corporations 30,000
Materials purchased 950,000
Conversion costs incurred:
Direct labor 330,000
Factory overhead 270,000
Physical counts conducted at the start and end of the year revealed the following balances in inventory:
January 1 December 31
Raw materials P 140,000 P 180,000
Work-in-process 250,000 160,000
Finished goods 120,000 90,000
Required: Compute the Minimum Corporate Income Tax (MCIT) using 2%.
PROBLEM No. 3:
Manual Corporation provides tax consultancy services to various clients. It reported the following in 2023, its fifth
year of operation:
Collections and billings:
Collections on services rendered, net of discounts P 3,000,000
Uncollected bills for services rendered, net of discounts 700,000
Advanced collections for services to be provided 500,000
Client reimbursements for out-of-pocket expenses
incurred by tax consultant staff 300,000
Client reimbursements for clients expenses paid
or advanced by Manual 200,000
Royalties from a software developed by Manual 20,000
Expenses:
Salaries of consulting staff P 1,500,000
Salaries of administrative employees 600,000
Office rent and utilities expense 400,000
Office depreciation expense 50,000
Office supplies expense 35,000
Interest expense 20,000
Insurance expense 30,000
Local tax expense 10,000
Required: Compute the Minimum Corporate Income Tax (MCIT) using 2%.
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PROBLEM No. 4: MCIT and RCIT
A corporate taxpayer started operations in 2018. It had the following results of operations in 2022 and 2023:
2022 2023
Total gross income P 2,000,000 P 4,500,000
Dividend income – domestic 50,000
Business expenses 2,500,000 3,500,000
Net income (loss) (P 500,000) P 1,050,000
Required: Compute for MCIT and RCIT.
PROBLEM No. 5:
A MSME Corporation reported the following on its sixth year of operation:
Sales, net of 1% withholding tax P 4,950,000
Cost of sales 2,000,000
Interest from deposit, net of tax 75,000
Gain on sale of domestic stocks directly to buyer 150,000
Casual rent income, net of 5% creditable withholding tax 95,000
Interest income from advances to employees 50,000
Business expenses 3,100,000
Estimated quarterly tax payments 10,000
Required: Compute for RCIT, MCIT and income tax payable or refundable.
PROBLEM No. 6:
A MSME business partnership providing computer repair services, reported the following on its sixth year of
operation:
Service fees, net of P100,000 withholding tax P 1,900,000
Salaries of staff, supplies, and other direct costs 1,000,000
Interest from bank deposits, net 50,000
Gain on sale of land classified as capital asset 400,000
Gain on sale of used equipment 150,000
Administrative business expenses 500,000
Estimated quarterly income tax payments 25,000
Required: Compute for RCIT, MCIT and income tax payable.
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