SOLUTIONS MANUAL
TRANSFER & BUSINESS TAXATION, 2020 Edition
By: TABAG & GARCIA
CHAPTER 1 – SUCCESSION & TRANSFER TAXES
TRUE OR FALSE
1. TRUE
2. TRUE
3.
4.
5.
TRUE
FALSE
FALSE
6.
7.
TRUE
FALSE
11.
12.
FALSE
TRUE
16.
17.
TRUE
FALSE
8.
9.
10.
FALSE
TRUE
FALSE
13.
14.
15.
TRUE
TRUE
FALSE
18.
19.
20.
TRUE
TRUE
TRUE
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
D
B
B
D
B
D
D
B
D
B
B
MULTIPLE CHOICE
1. D
12. C
23. D
2. A
13. C
24. B
3. D
14. B
25. D
4. C
15. D
26. D
5. C
16. C
27. B
6. A
17. B
28. D
7. B
18. D
29. A
8. A
19. C
30. D
9. B
20. B
31. B
10. A
21. B
32. A
11. D
22. B
33. D
**Inheritance and repudiation takes effect upon death of the decedent
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
B
C
D
D
A
B
A
D**
D
D
B
CHAPTER 2 – GROSS ESTATE
PROBLEM SOLVING
(P2.1)
(1) P19,300,000
(4) P14,300,000
Citizen/ Resident
(# 1 & 2)
Family home in the Philippines
P8,000,000
Parcel land of with vacation house in Malaysia
5,000,000
Farm land in the Philippines
3,000,000
Shares of stock of a DC
2,000,000
Shares of stock of a foreign corporation the entire business of which is
500,000
in the Philippines, deposited in a bank safety deposit box in Malaysia
Receivable from a friend who has no property whatsoever
300,000
Receivables under insurance policies:
§
Life insurance with his estate as revocable beneficiary
200,000
§
Life insurance with his daughter as revocable beneficiary
300,000
§
Life insurance with his son as irrevocable beneficiary
§
Life insurance (group) taken by the employer of the decedent
TOTAL GROSS ESTATE
P19,300,000
1|
(2) P19,300,000
(3) P11,000,000
NRA with R
(# 3)
P8,000,000
3,000,000
-
NRA w/o R
(# 4)
P8,000,000
3,000,000
2,000,000
500,000
-
300,000
P11,000,000
200,000
300,000
P14,300,000
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
(P2.2)
To Juan
P25,000,000
To Pedro
To Maria
To Sisa
Total Gross Estate
18,000,000
15,000,000
20,000,000
P78,000,000
(P2.3)
Shares of stock (Frozen Co.)
[(P8M+3M)/800,000sh x 100,000 shares
Shares of stock (Divergent Co..)
100,000 shares x P15
Shares of stock (Lenovo Co..)
100,000 shares x P12
Total Gross Estate
(P2.4)
P1,375,000
1,500,000
1,200,000
P4,075,000
(1)P230,0000; (2)P1,100,000; insufficient consideration (3)P0; (4)P5,000,000; (5)P1M + [1M x (1M x 10% x 1.5)] = P1,150,000
MODIFIED IDENTIFICATION
EXERCISE A
1. Included
6. Excluded
2. Included
7. Excluded *
3. Excluded
8. Included **
4. Included
9. Excluded
5. Excluded
10. Included***
*Designated by the prior decedent
**Exclusions from the gross estate. Nonetheless, the tax code requires these items to be included first in the gross estate before
deducting the same from the gross estate.
*** Bequests to charitable institutions are considered exclusions from the gross estate only if the problem clearly states that not
more than 30% were used for administrative purposes. However, even if not more than 30% of the bequests were used for
administrative purposes, since whether or not such is exempt will undergo scrutiny first by the BIR, these items shall be included first
in the gross estate before deducting the same for estate tax purposes.
EXERCISE B
EXERCISE C
1.
2.
3.
4.
5.
TRUE OR FALSE
1. TRUE
2. TRUE
3. TRUE
4. FALSE
5. TRUE
2|
P0; valid sale
P0; valid sale
P0; valid sale
P4,000,000
P6,000,000
6.
7.
8.
9.
10.
FALSE
FALSE
FALSE
TRUE
TRUE
1.
2.
3.
4.
5.
11.
12.
13.
14.
15.
FALSE
TRUE
TRUE
FALSE
FALSE
16.
17.
18.
19.
20.
P10M
P20M
P5M
P10M
P0
TRUE
TRUE
FALSE
TRUE
FALSE
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
MULTIPLE CHOICE
1. A
2. B
3. D
4. B
5. C
6. C
7. A
8. B
9. A
10. A
11. A
12. B
13. D
14. A
15. C
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
D
C
B
D
A
D
B
A
B
A
C
C
C
D
B
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
D
C
B
A
A
B
D
C
B
C
C
C
B
B/C
B
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
C
D
C
C
B
D
D
C
C
C
B
D
C
C
A
61.
62.
63.
64.
65.
66.
67.
68.
69.
70.
71.
72.
73.
74.
A
A
A
C
D
B
A
C
C
D
C
A
D
D
Supporting Computations (Multiple Choice):
(22).
Common stock-Sunchamp [(P40+39)/2] x 2,000 shares
Common stock – AgriNurture (1,500 shares x P45)
Preferred stock – Greenery (3,000 shares x P50 par value)
Car @ FMV
Real properties @ zonal value
Total Exclusion from the gross estate
P79,000
67,500
150,000
400,000
120,000
P816,500
Bank deposit in the foreign branch of a domestic bank
Bank deposit in Makati branch of a foreign bank
Shares of stock issued by a domestic corporation
(certificate kept in Canada)
Franchise exercised in Manila
Receivable, debtor from Mindanao
Total Exclusion from the gross estate
P500,000
300,000
1,000,000
(23).
800,000
200,000
P2,800,000
(24).
House and lot, family home in Quezon City
Bank deposit in Makati branch of a foreign bank
Shares of stock issued by a domestic corporation
(certificate kept in Canada)
Franchise exercised in Manila
Receivable, debtor from Mindanao
Total Inclusion from the gross estate
P1,500,000
300,000
1,000,000
800,000
200,000
P3,800,000
(26).
Shares of stocks, domestic corp.
(certificate kept in UK)
Shares of stocks, domestic corp.
(certificate kept in Phils.)
Franchise exercised in the Phils.
Receivables, debtor is from Phils.
Intangibles subject to reciprocity
3|
P250,000
100,000
200,000
50,000
P600,000
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
(27).
Land & building, Philippines
House and lot, Philippines
Shares of stocks, domestic corp. (certificate kept in UK)
Shares of stocks, domestic corp. (certificate kept in Phils.)
Franchise exercised in the Phils.
Receivables, debtor is from Phils.
Gross Estate
(33).
(34).
(35).
(36).
P2,000,000
3,500,000
250,000
100,000
200,000
50,000
P6,100,000
(P12M/100,000) x 1,000 shares = P120,000
P100 x 1,000 shares = P100,000; Par Value=P10M/100,000 = P100/share
P100 x 1,000 shares = P100,000
(P140 + P80/2) x 1,000 shares = P110,000
(44).
Consideration
received
Land
P1,500,000
Shares of stock
100,000
Vintage car
50,000
Painting
250,000
INCLUSION IN THE GROSS ESTATE
(48).
FMV upon transfer
P1,500,000
50,000
80,000
400,000
FMV upon death
P2,000,000
150,000
100,000
500,000
Gross Estate
None. Valid sale
None. Valid sale
P50,000
250,000
P300,000
Includible in the Gross Estate = FMV @ time of “+” less Consideration received = P300k-P100k = P200,000
CHAPTER 3 – DEDUCTIONS FROM THE GROSS ESTATE
PROBLEM SOLVING
(P3.1) (a) P2,500,000 computed as follows:
Loss due to shipwreck, two (2) months after the decedent’s death.
Robbery loss
Allowable Deduction
P500,000
P2,000,000
P2,500,000
(b) P500,000 computed as follows:
Loss due to shipwreck, two (2) months after the decedent’s death.
Allowable Deduction
P500,000
P500,000
(P3.2) P5,715,000 computed as follows:
Ordinary Deductions:
Claim against insolvent person (500,000-400,000)
Unpaid taxes on the estate before death
Unpaid mortgage on the estate
Funeral expenses (no longer allowed under TRAIN Law)
Judicial expenses (no longer allowed under TRAIN Law)
Unpaid loans arising from debt instruments (notarized)
4|
P100,000
150,000
200,000
125,000
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
Unpaid loans arising from debt instruments (not notarized). The debt
instrument was issued by a financial institution not requiring notarizations for
debt instruments issued
Casualty loss
Special Deductions:
Standard deduction
Medical expenses (no longer allowed under TRAIN Law)
Total Allowable deduction from the gross estate
75,000
65,000
5,000,000
P5,715,000
(P3.3) (Claim Against Insolvent Persons)
Case A: P100,000
Case B: P333,333 computed as follows:
Receivable
Collectible portion (400/1,200) x 500,000
Deductible claim (Uncollectible portion)
P500,000
(166,667)
P333,333
Case C: P0. Debtor is not insolvent
Case D: P250,000
Total Assets
Taxes payable (Gov’t is a priority creditor)
Assets after deducting unpaid taxes
P1,200,000
(800,000)
P400,000
Receivable (CAIP)
Collectible (400/800) x 500,000
Deductible Claim against Insolvent Persons
P500,000
(250,000)
P250,000
(P3.4) P200,000 computed as follows:
Uncollectible receivable from Juan
Uncollectible receivable from Manuel
Total
P100,000
100,000
P200,000
(P3.5) P133,333 computed as follows:
Debtor’s (Pedro) Assets
Taxes payable by Pedro to the BIR (gov’t is a priority creditor)
Assets of Pedro after deducting unpaid taxes
Receivable from Pedro (CAIP)
Collectible amount from Pedro (allocated): (200/600) x 200,000
Deductible Claim (uncollectible) against Insolvent Person
(P3.6) P262,500 computed as follows:
Value to take
1st Deduction: Mortgage paid
Initial basis
2nd Deduction: Proportional deduction
(750/4,500) x 562,500
Final Basis
x Vanishing rate
Vanishing Deduction
5|
P400,000
(200,000)
P200,000
P200,000
(66,667)
P133,333
P937,500
(187,500)
P750,000
(93,750)
P656,250
40%
P262,500
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
(P3.7) STANDARD DEDUCTION
CASE
A
P5,000,000
B
P5,000,000
C
P5,000,000
D
P500,000
E
P500,000
(P3.8) FAMILY HOME
Case A: P0
Case B: P5,000,000
Case C: P0; exclusive property of the surviving spouse
Case D: P10,000,000
Case E: P12M/2 = P6,000,000
Case F: [ 5M + (5,000,000/2)] = P7,500,000
(P3.9)
Question 1: P7,308,013;
Question 2: P7,308,013;
(Decedent: Resident Citizen)
(Decedent: Resident Alien) (same computation with Q#1).
Domestic shares of 2,000 shares inherited 6 years ago
House and lot, family home, located in Davao, inherited 2 years ago
Jewelry items, in the Philippines at the time of death
Jewelry items kept in a vault abroad
Bank deposit in a Philippine branch of a U.S. bank
Interest from bank deposit (after death)
Transfer for Public Use (donation to the gov’t provided in his will)
GROSS ESTATE
ORDINARY DEDUCTIONS:
Funeral expenses
Judicial expenses, abroad
Judicial expenses, Philippines
Claims against the estate
Transfer for Public Use
Vanishing deductions
(Shares of stocks = None; House and Lot = Allowed)
SPECIAL DEDUCTIONS
Standard Deduction (TRAIN Law)
Family Home
Medical Expenses
RA 4917
NET TAXABLE ESTATE
Value to take
1st Deduction: Mortgage paid
Initial basis
2nd Deduction: Proportionate deduction
(1,500/15,850) x P370,000
Final Basis
x Vanishing rate
Vanishing Deduction
6|
P8,000,000
2,000,000
400,000
200,000
5,000,000
250,000
P15,850,000
120,000
250,000
1,171,987**
5,000,000
2,000,000
-
(1,541,987)
(7,000,000)
P7,308,013
P1,500,000
P1,500,000
(35,016)
P1,464,984
80%
P1,171,987**
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
(P3.10)
Question No. 1
TFPU
House and Lot in Makati (Family Home)
Farm Lot
Other real properties
Claim against insolvent person
Transfer in contemplation of death
Total Gross Estate
P300,000
1,500,000
825,000
15,000,000
225,000
1,250,000
P19,100,000
Allowable Deductions
Funeral expenses
-
Judicial expenses
-
TFPU (correct amount)
(300,000)* *
Claim against insolvent person
(225,0000)**
Unpaid mortgage on farm lot
Standard deduction
Medical expenses
Family Home
TAXABLE NET ESTATE
Question No. 2
Value to take
(75,000)**
(5,000,000)
(1,500,000)
P12,000,000
P575,000
Mortgage paid (P150,000-P75,000)
(75,000)
Initial Basis
500,000
Proportional deduction
(500/19,100) x 600,000**
(15,707)
Final Basis
484,293
Vanishing deduction rate
20%
Vanishing Deduction***
P96,859
NET ESTATE without VD (from Q#1)
7|
P12,000,000
Vanishing Deduction***
(96,859)
TAXABLE NET ESTATE
P11,903,141
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
(P3.11)
Question No. 1
VALUE TO TAKE (LAND)
P1,250,000
MORTGAGE PAID
(50,000)
INITIAL BASIS
1,200,000
Proportionate Deduction:
(1,200/12,800 x P700,000**)
(65,625)
FINAL BASIS
P1,134,375
VANISHING DEDUCTION %
40%
VANISHING DEDUCTION
P453,750
Correct ELIT + TFPU:
=1,200k+100k-300k-600k+300k TFPU=P700,000***
Question No. 2
Gross Estate
P12,800,000
Correct Losses, Indebtedness, Taxes (LIT)
(400,000)
TFPU
(300,000)
Vanishing deduction
(453,750)
Standard deduction
(5,000,000)
Family Home
(2,000,000)
Medical expenses (repealed under TRAIN Law)
Death benefits under RA4917
(200,000)
Net taxable estate
TRUE OR FALSE
1. TRUE
2. TRUE
3. TRUE
4. TRUE
5. FALSE
8|
6.
7.
8.
9.
10.
FALSE
TRUE
FALSE
TRUE
TRUE
-
P4,446,250
11.
12.
13.
14.
15.
TRUE
FALSE
TRUE
FALSE
TRUE
16.
17.
18.
19.
20.
TRUE
TRUE
TRUE
TRUE
FALSE
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
MULTIPLE CHOICE
1. C
2. D
3. C
4. D
5. A
6. A
7. A
8. D
9. D
10. C
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
D
D
A
A
B
B
B
C
A
C
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
D
C
C
A
C
B
B
D
A
B
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
D
A
A
C
D
A
A
A
C
B
Supporting Computation (Multiple Choice):
(6.) A
Real property tax for the year 2017
Notarized interest bearing promissory note
Accrued interest on the promissory note at the time of death
Income tax due for 2013
Allowable deductions
P100,000
100,000
20,000
200,000
P420,000
(12). D
Income tax from practice of profession , 2017
Income tax from practice of profession for Jan.-June, 2018
Real property taxes for 2016 and 2017
Business taxes for 2017
Deductible taxes
P300,000
100,000
150,000
100,000
P650,000
(29). A
Value to take/Initial Basis
Mortgage paid
Initial basis
2nd Deduction:
(850/1,000 x P100,000**)
Final Basis
x Vanishing rate
VANISHING DEDUCTION
P900,000
(50,000)
850,000
(85,000)
P765,000
40%
P306,000
** Mortgage P150,000 – 50,000
(39). C
Gross Estate
(Tangible property Phils.; with reciprocity)
Prorated LIT (1,200,000 x 6,000/10,000,000)
Standard deduction
Taxable Estate
9|
P6,000,000
(720,000)
(500,000)
P4,780,000
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
(40). B
Shares, domestic corporation
Tangible personal property
Gross Estate
Prorated LIT (500,000 x 2,000/2,500)
Standard deduction
Taxable Estate
TAX DUE
Estate Tax Due (P1.1M x 6%)
P500,000
1,500,000
2,000,000
(400,000)
(500,000)
P1,100,000
P66,000
CHAPTER 4 – PROPERTY RELATIONS
PROBLEM SOLVING
P4.1
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
ACP
C
C
C
C
C
C
E
E
C
C
C
E
C
E
15.
E
CPG
E
C
C
C
E
C
E
C
C
C
C
E
E
C (All fruits or incomes are common property under CPG. Hence, the
property purchased shall be classified as common.
E
P4.2
Absolute Community of Property (ACoP)
a) P12,400,000
b) P19,500,000
c) P9,750,000
d) P17,150,000
Land inherited during marriage
Other personal property owned before marriage
Other personal property acquired during marriage
Total
Deductions:
Casualty loss
Funeral expenses (no longer allowed under TRAIN Law)
Judicial expenses (no longer allowed under TRAIN Law)
Unpaid Taxes
Claims against the estate
Vanishing deduction**
10 |
Exclusive
P24,000,000
P24,000,000
Common
P16,000,000
5,000,000
P21,000,000
Total
P45,000,000
(500,000)
(400,000)
(600,000)
(11,600,000)
(13,100,000)
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
Net estate before special deduction and share of the
surviving spouse
Standard deduction
Medical expenses (no longer allowed under TRAIN Law)
Share of the Surviving Spouse (19,500,000/2)
NET TAXABLE ESTATE
VANISHING DEDUCTION**
Value to Take/Initial Basis
Proportional Deduction (15,000/45,000 x P1,500,000)
Final Basis
x Vanishing Deduction %
Vanishing Deduction
P12,400,000
P19,500,000
P31,900,000
(5,000,000)
(9,750,000)
P17,150,000
P15,000,000
(500,000)
P14,500,000
80%
P11,600,000
Conjugal Partnership of Gains (CPG)
e) P28,400,000
f)
P3,500,000
g) P1,750,000
h) P25,150,000
Land inherited during marriage
Other personal property owned before marriage
Other personal property acquired during marriage
Total
Deductions:
Unpaid Taxes
Claims against the estate
Casualty Loss
Funeral expenses
Judicial expenses
Vanishing deduction (same computation)
Net estate before special deduction and share of the
surviving spouse
Standard deduction
Medical expenses
Share of the Surviving Spouse (3,500,000/2)
NET TAXABLE ESTATE
11 |
Exclusive
P24,000,000
16,000,000
P40,000,000
Common
5,000,000
P5,000,000
Total
P45,000,000
(400,000)
(600,000)
(500,000)
(11,600,000)
P28,400,000
P3,500,000
(13,100,000)
P31,900,000
(5,000,000)
(1,750,000)
P25,150,000
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
P4.3
Decedent: Non-resident alien
a) P1,621,396
b) P4,451,136
c) P3,346,964
d) P200,818
Exclusive properties, Phils.
Conjugal properties, Phils.*
LIT**
Vanishing Deductions ***
Transfer for Public Use ****
Net Estate
Share of the Surviving Spouse (4,451,136/2)
Standard deduction
Net Taxable Estate
x Estate Tax Rate
Estate Tax Due
Exclusive
P2,000,000
(178,604)
(200,000)
P1,621,396
Common
Total
P5,000,000
(548,864)
P7,000,000
P4,451,136
P6,072,532
(2,225,568)
(500,000)
P3,346,964
6%
P200,818
*The problem is silent as to reciprocity, hence, the gross estate should include tangible and intangible properties within the Philippines.
**LIT:
Funeral expenses
PJudicial expenses
Claim against the estate
1,725,000
TOTAL ELIT
P1,725,000
X
7,000/22,000
ALLOWABLE ELIT
P548,864
***VANISHING DEDUCTIONS:
Value to take
P500,000
1st Deduction: Mortgage paid
Initial basis
P500,000
2nd Deduction: Proportionate deduction
(500/7,000) x (548,864 + 200,000)
(53,490)
Final Basis
P446,510
x Vanishing rate
40%
Vanishing Deduction
P178,604
****
Since the properties were already classified as exclusive and common, it should be assumed that the exclusive properties were already
inclusive of transfer for public use.
12 |
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
P4.4
(Decedent: Resident Alien; Single)
(a) Net Taxable estate = P49,500,000;
House and lot, USA *
Investment in stock, Philippines
Investment in stock, USA
Investment in bonds, USA
Cash in bank, Philippines
Cash on hand, Philippines
Claim against insolvent person (fully uncollectible)
Car, Philippines
Receivable under RA 4917
Devise to Quezon City for children’s playground**
Total Gross Estate
Ordinary Deductions:
Funeral expenses
Judicial expenses
Unpaid Philippine income tax for income in 2017
Loss on December 31, 2018 due to theft
Devise to Quezon City for children’s playground
Claim against insolvent person (fully uncollectible) ***
(b)Estate tax due = P2,970,000
P20,000,000
8,000,000
10,000 000
7,000,000
3,000,000
500,000
2,000.000
8,000,000
500,000
700,000
P59,700,000
P1,200,000
800,000
700,000
2,000,000
Special Deductions:
Standard deduction
RA 4917
Medical expenses
Net Taxable Estate
Estate Tax Due (P49,500,000 x 6%)
*
(4,700,000)
(5,000,000)
500,000
P49,500,000
P2,970,000
*Family home is not allowed as a deduction for single decedent
**To be deductible, the legacy/devise should be included first in the decedent’s gross estate
***Assume the debtor is an insolvent person.
P4.5
a)
b)
c)
Vanishing deduction = P18,243,902
Net Taxable estate = P31,066,098
Estate tax due = P1,860,366
Land
House and Lot (Family Home)
Other tangible personal properties
Claims against insolvent persons
Ordinary deductions:
Other claims against conjugal properties
Claims against insolvent persons
Unpaid mortgage**
VANISHING DEDUCTION*
Net exclusive/conjugal
Special deductions:
Standard deduction
Family Home
Medical expenses
Share of the surviving spouse
TAXABLE ESTATE
Estate Tax Due (P31,006,098 x 6%)
13 |
Exclusive
P30,000,000
Conjugal
P50,000,000
22,000,000
500,000
Total
P102,500,000
(5,000,000)
(500,000)
(3,500,000)
(18,243,902)
P11,756,098
P68,500,000
(13,560,976)
P80,256,098
(5,000,000)
(10,000,000)
(34,250,000)
P31,006,098
P1,860,366
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
Value to take/Initial Basis***
2nd Deduction: 25,000/102,500 x 9,000,000
Final Basis
x VD rate
Vanishing Deduction*
P25,000,000
(2,195,122)
P22,804,878
80%
P18,243,902.4*
** P7,000,000 – 3,500,000 = P3,500,000
***The value to take shall be lower amount between the valuation at the time of death and the valuation upon inheritance (P30M vs P25M). Likewise,
the amount paid on the mortgage should not be considered in computing the vanishing deduction because the amount pertains to a mortgage entered
into by Pedro during his lifetime. To be considered in computing the VD, the mortgage should have been assumed on the property at the time of
inheritance or donation.
TRUE OR FALSE
1. TRUE
2. TRUE
3. TRUE
4. TRUE
5. FALSE
MULTIPLE CHOICE
6.
7.
8.
9.
10.
FALSE
TRUE
TRUE
FALSE
FALSE
11.
12.
13.
14.
15.
TRUE
TRUE
TRUE
FALSE
TRUE
1.
2.
3.
4.
5.
6.
A
B
A
C
D
D
8.
9.
10.
11.
12.
13.
B
D
C
B
D
C
15.
16.
17.
18.
19.
20.
C
D
C
C
A
D
22.
23.
24.
25.
26.
27.
C
D
A
A
D
A
7.
D
14.
D
21.
B
28.
A
29.
30.
B
A
NOTE : T or F; #9; Judicial expenses are no longer deductible from the gross estate
Supporting Computations (Multiple Choice)
(No. 19 & 20)
Gross Estate (CPG):
Rest House in Batangas
Car
Commercial land
Income from the commercial land
Income from exclusive property of the spouse
Jewelry owned before the marriage
Other properties at the time of her death
Gross Estate
(No. 21 & 22)
Gross Estate (ACoP):
Rest House in Batangas
Car
Commercial land
Income from the commercial land
Jewelry owned before the marriage
Other properties at the time of her death
Gross Estate
14 |
Exclusive
P2,500,000
1,000,000
5,000,000
Conjugal
500,000
200,000
300,000
P8,800,000
Exclusive
P2,500,000
P2,500,000
1,000,000
P1,700,000
Common
1,000,000
5,000,000
500,000
300,000
1,000,000
P7,800,000
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
(No. 23)
Conjugal properties
Conjugal Deductions:
Funeral and judicial expenses (no longer allowed)
Casualty losses
Unpaid taxes
Claim against the estate
Net Conjugal properties
Divide
Share of the Surviving Spouse
P20,000,000
(3,500,000)
(2,000,000)
(4,500,000)
P10,000,000
2
P5,000,000
(No. 24)
Real property, Philippines
Real property, USA
Claim against insolvent persons
Funeral expenses
Judicial expenses
Claim against insolvent persons
Unpaid taxes
Balance
Standard Deductions
Medical expenses
Family Home (P1,500,000/2)
Share of the surviving spouse (P11,900,000/2)
Net Taxable Estate
P7,000,000
5,000,000
50,000
(50,000)
(50,000)
P11,950,000
(5,000,000)
(750,000)
(5,975,000)
P225,000
(No. 25)
Exclusive
Conjugal real properties
Conjugal family home
Paraphernal properties
(excluded; exclusive of the surviving spouse)
Exclusive properties
Total
Ordinary Deductions:
Funeral expenses
Unpaid taxes
Casualty losses (from excl.property)
Other losses (P1M x 75%)
Net Estate before Special Deductions
Special Deductions:
Standard Deductions
Medical expenses
Family Home (5,000,000/2)
Share of the surviving spouse (P11,250,000/2)
Net Taxable Estate
15 |
Common
P7,000,000
5,000,000
Total
P2,500,000
P2,500,000
P12,000,000
P14,500,000
(100,000)
P2,400,000
(750,000)
P11,250,000
(850,000)
P13,650,000
(5,000,000)
(2.500,000)
(5,625,000)
P525,000
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
(No. 26 and 27)
ABSOLUTE COMMUNITY OF PROPERTY
Exclusive
Properties-Land
Other personal property owned before marriage
Other personal property acquired during marriage
Gross Estate
Vanishing deduction
Claim against the estate
Losses
Net conjugal before special deductions
Share of surviving spouse (P3,080,000/2)
(No. 28)
Common
2,400,000
1,600,000
500,000
P4,500,000
(1,120,000)
(200,000)
(100,000)
P3,080,000
P1,540,000
#26-P0
CONJUGAL PARTNERSHIP OF GAINS
Exclusive
Common
Properties-Land
P2,400,000
Other personal property owned before marriage
1,600,000
Other personal property acquired during marriage****
P500,000
Gross Estate
P4,000,000
P500,000
Ordinary Deductions
Claim against the estate
(200,000)
Losses
(100,000)
Vanishing Deductions*****
(1,120,000)
Net Estate Before Special Deductions
P2,880,000
200,000
Share of the surviving spouse (P200,000/2)
****If silent and unless the problem clearly illustrate that it is exclusive, assume the property is common.
Value to take
1st Deduction: Mortgage paid
Initial basis
2nd Deduction: Proportionate deduction
(1,500/4,500) x 300,000
Final Basis
x Vanishing rate
Vanishing Deduction
(No. 29)
Real property inherited during marriage from his father
Real property given as gift by his uncle during marriage
Land received as donation during marriage
Cash income from the real property received as gift
Total exclusive property
(No. 30)
House built on the inherited land using communal fund
Real properties acquired by the spouses during the marriage
Claim against insolvent person
Personal properties acquired during the marriage
Total Community property
16 |
Total
P4,500,000
(100,000)
P1,500,0 00
P1,500,000
(100,000)
P1,400,000
80%
P1,120,000
*****
P500,000
1,500,000
500,000
100,000
P2,600,000
P900,000
1,500,000
50,000
1,000,000
P3,450,000
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
CHAPTER 5 – ESTATE TAX CREDIT AND DISTRIBUTABLE ESTATE
PROBLEM SOLVING
P5.1 One foreign country only:
a)
b)
Decedent is a resident citizen
Total Net Estate before special deductions
Less: Standard deduction
Net Taxable estate
x Estate tax rate
Estate tax due
Less: Estate tax credit
Estate tax paid abroad
vs. Limit (P4/10 x P600,000)
Allowed (lower)
Estate tax payable
P15,000,000
(5,000,000)
P10,000,000
6%
P600,000
P200,000
240,000
(200,000)
P400,000
Decedent is a nonresident alien
Total Net Estate before special deductions (Phils. only)
Less: Standard deduction
Net Taxable estate
x Estate tax rate
Estate tax payable (tax credit is not allowed to NRA decedents)
P12,000,000
(500,000)
P11,500,000
6%
P690,000
P5.2 More than one foreign countries:
Net Taxable Estate, world
Estate Tax Due (P20M x 6%)
Estate tax credit **
Estate tax payable
P1,200,000
(570,000)**
P630,000
Limit 1 (Per foreign country):
Canada: 8,000/20,000 x P1.2M
USA: 2,000/20,000 x P1.2M
Limit
P480,00
120,000
Actual
P520,000
90,000
Allowed
P480,000
90,000
P570,000
P600,000
P610,000
600,000
Limit 2 (all foreign countries):
10,000/20,000 x P1.2M
ALLOWED TAX CREDIT
(Lower between L1 and L2)
17 |
P20,000,000
P570,000**
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
P5.3
Net Taxable Estate
Estate Tax Due (P20M x 6%)
Estate tax credit**
Estate tax payable after tax credit
P20,000,000
P1,200,000
(300,000)**
P900,000
Limit 1 (Per foreign country with tax payments only):
Singapore: 5,000/20,000 x P1,200,000
China: not included in the determination of Limit 1 since
there was no estate tax paid in China
Japan: 2,000/20,000 x P1,200,000
Limit 2 (all foreign countries including China):
10,000/20,000 x P1,200,000
ALLOWED TAX CREDIT
Limit
P300,000
-
Actual
P200,000
-
Allowed
P200,000
-
120,000
100,000
100,000
P300,000
P600,000
300,000
300,000
P300,000
P5.4
a)
b)
c)
Net Taxable estate = P7,474,000
Estate tax due = P448,440
Net Distributable Estate = P11,731,560
House and lot (Family Home), USA
Cash in bank, USA
Car, USA
Accounts receivable from an insolvent person in Quezon City**
Investment in stock, Philippines
Parcel of land in Quezon City inherited from his father 2 ½ years
ago
Investment in bonds, foreign corporation***
Cash in bank, Philippines
Car, Philippines
Devise to Quezon City for children’s playground or TFPU****
Total Gross Estate
Ordinary Deductions:
LITe:
Claim against the estate (Philippines)
Unpaid Philippine income tax for 2016 and 2017
Loss on December 31, 2018 due to theft
Claim against insolvent person ***
TFPU
Vanishing Deduction
Special Deductions:
Standard deduction
Family Home in USA; (not allowed)
NET TAXABLE ESTATE
Estate Tax Due (P7,474,000 x 6%)
18 |
P8,000,000
650,000
2,000,000
200,000
800,000
1,000 000
700,000
450,000
800,000
1,400,000
P16,000,000
P940,000
320,000
180,000
200,000
(1,640,000)
(1,400,000)
(486,000)
(5,000,000)
P7,474,000
P448,440
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
**To be deductible, the legacy/devise should be included first in the decedent’s gross estate;
*** Considered as Estate “within”
Value to take/Initial basis
2nd Deduction: Proportionate deduction
(1,000/16,000) x P1,640,000 + P1.4M****
Final Basis
x Vanishing rate
Vanishing Deduction
Total Gross Estate
Deductions:
Actual funeral expenses
Judicial expenses
Claim against the estate (Philippines)
Unpaid Philippine income tax for 2016 and 2017
Loss on December 31, 2018 due to theft
Claim against insolvent person
TFPU
Vanishing Deduction
Standard deduction
Estate tax due
NET DISTRIBUTABLE ESTATE
MULTIPLE CHOICE
1. C
2. C
3. D
4. C
5.
6.
7.
19 |
C (decedent: resident alien)
Total net taxable estate
x Estate tax rate
Estate tax
Less: estate tax credit
Estate tax payable
(190,000)
P810,000
60%
P486,000
P16,000,000
P480,000
300,000
940,000
320,000
180,000
200,000
1,400,000
No allowed
Not allowed
448,440
(4,268,440)
P11,731,560
A
C
B
Supporting Computations:
No.5
A
Net taxable estate
x Estate tax rate
Estate tax due
Less: Estate tax credit
Limit = P1/4 x P240,0000 = P60,000
Actual tax paid abroad = P80,000
Estate tax payable
No. 6
P1,000,000
P4,000,000
6%
P240,000
(60,000)
P180,000
P10,000,000
6%
P600,000
NA
P600,000
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
No. 7
B
Gross Estate
Ordinary deductions - Philippines
(since the amount provided is P3M only, it shall be assumed that such
amount is exclusive of Standard Deduction and Family Home)
Deductions - France
Net estate before special deductions
Less:
Standard Deduction
Share of the surviving spouse
(P15M x 60% / 2)
Family home (P8M / 2)
Net taxable estate
x Estate tax rate
Estate tax due
Less: Tax credit
Limit: 4/6.5 x P390,000 = P240,000
Actual: P30,000
Estate tax payable
P20,000,000
(3,000,000)
(2,000,000)
P15,000,000
(5,000,000)
(4,500,000)
(4,000,000)
P1,500,000
6%
P90,000
(30,000)
P60,000
CHAPTER 6 – DONOR’S TAX
PROBLEM SOLVING
P6.1
TO
Abel
Jen
Gore
Alexa
Earl
Hananiah
Chen
Kristine
Gavrie
Land 1**
Land 2***
Land 3****
Car
GROSS GIFT
A
P800,000
3,000,000
250,000
100,000
5,000,000
1,500,000
100,000
100,000
500,000
5,000,000
200,000
P16,550,000
B
P800,000
3,000,000
250,000
100,000
5,000,000
1,500,000
100,000
100,000
500,000
5,000,000
200,000
P16,550,000
QUESTION
C
P800,000
3,000,000
250,000
100,000
5,000,000
1,500,000
100,000
100,000
500,000
5,000,000
200,000
P16,550,000
D
P800,000
E
P800,000
-
250,000
100,000
1,500,000
500,000
200,000
P3,000,000
1,500,000
100,000
500,000
200,000
P3,450,000
*The question is “gross gifts”, hence, disregard the mortgage.
**Sale of Land #1 is a transfer with insufficient consideration. However, unlike in Estate Taxation, Transfer with insufficient
consideration for donor’s tax purposes is not taxable if the property donated is a real property classified as capital asset
subject to capital gains tax.
*** Sale of Land # 2 is considered bona fide or valid sale.
****Sale of Land #3 is a transfer with insufficient consideration. Nonetheless, the sale is subject to donor’s tax because the
property was not subjected to capital gains tax. Capital gains tax on real properties are applicable only on sale of real
properties classified as capital assets located in the Philippines.
20 |
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
P6.2
ITEM
A
B
C
D
E
F
Car, Alabang
Car, Malaysia
Land Cebu
GROSS GIFT
Q#A
P4,500,00
1,000,000
1,500,000
2,000,000
3,000,000
500,000
200,000
200,000
P12,900,000
Q#B
P4,500,00
3,000,000
200,000
P7,700,000
P6.3
(a)
(b)
(c)
(d)
None; subject to CGT, not donor’s tax
CGT = P2.5M x 6% = P150,000
Donor’s tax = [(P2.5M – P1.5M) – 250,000] x 6% = P45,000 TRAIN Law
CGT = P0
(a)
(b)
(c)
(d)
Donor’s Tax = [(P850,000 – 400,000) – 250,000] x 6% = P12,000
CGT = P0; the shares were sold at a loss.
Donor’s Tax = P0; exempt from donor’s tax under the TRAIN Law
CGT = P0; the shares were sold at a loss.
P6.4
P6.5 – Donations were made after the effectivity of TRAIN Law
a) March 1 = Exempt
b) May 30 = P21,000
c) June 30 = P90,000
d) July 31 = P0; exempt
e) September 30 = P447,200
21 |
Solution:
Gross Gifts – March 1
Less: Tax exempt gift
Net taxable gift
Donor’s Tax Due/ Payable – March 1
P200,000
(250,000)
PExempt
Gross gift – May 30
Less: Mortgage assumed by the donee
Add: Prior net gift
Total Gifts as of May 30
Less: Tax Exempt gift
Taxable gift – May 30
x
Donor’s Tax Due
Less: Tax paid
Donor’s tax payable-May 30
P500,000
(100,000)
200,000
P600,000
(250,000)
P350,000
6%
P21,000
P21,000
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
Gross gift – June 30
P300,000
Add: Prior net gift
Total gifts as of June 30
Less: Tax Exempt gift
Taxable gift – June 30
x
Donor’s Tax Due
Less: Tax paid as of May 30
Donor’s tax payable-June 30
600,000
900,000
(250,000)
P650,000
6%
P39,000
(21,000)
P18,000
Gross gift – September 30
Less: Mortgage assumed by the donees
Add: Prior net gift
Total gifts as of June 30
Less: Tax Exempt gift
Taxable gift – Sept. 30
x
Donor’s Tax Due
Less: Tax paid as of June 30
Donor’s tax payable-Sept. 30
Apply cumulative rule regardless of the
relationship between the donor and the donee
P3,000,000
(600,000)
900,000
P3,300,000
(250,000)
P3,050,000
6%
P183,000
(39,000)
P144,000
P6.6 – Donations were made before and after effectivity of TRAIN Law
1) March 30, 2018 = P0
2) May 25, 2018 = P0, exempt
Solution
March 30, 2018
Gross gift
Less: Tax exempt gift
Taxable net gift
P100,000
(250,000)
P-
May 25, 2018
Gross gift - church
Deductions
Add: Prior net gift
Less: Tax exempt gift
Taxable gift
Tax Due
P200,000
(200,000)
100,000
(250,000)
P0
P0; exempt
P6.7
1)
2)
3)
June 6, 2018 = P0; exempt
October 8, 2018 = P2,160
November 4, 2018 = P240
Gross Gift (P460k + 20K)/2
Mortgage assumed
Net gift
Less: Tax exempt gift
Net Taxable gifts – June 6
Donor’s Tax Payable
22 |
June 6, 2018
Husband
P240,000
(2,000)
P238,000
(250,000)
(P12,000)
P0
Wife
P240,000
(2,000)
P238,000
(250,000)
(P12,000)
P0
Total
P0
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
October 8, 2018
Husband
P30,000
Gross Gift
Dowry
Prior Net Gift
Total net gifts
Less: Tax exempt gift
238,000
P268,000
(250,000)
P18,000
x6%
P1,080
P1,080
Donor’s Tax Due
Tax Paid-June 6
Donor’s Tax Payable
Gross Gifts (charitable org.; exempt)
To a family friend
Prior net gifts
Tax exempt gift
Taxable gift
Donor’s Tax Due
Less: Donor’s tax paid
Donor’s Tax Payable
P6.8 (1)P6,000
23 |
(2)P0
(3)P36,000
November 4, 2018
Husband
P2,000
268,000
(250,000)
P20,000
@6%
P1,200
(1,080)
P120
Wife
P30,000
238,000
P268,000
(250,000)
P18,000
x6%
P1,080
P1,080
Total
Wife
Total
P2,160
P2,000
268,000
(250,000)
P20,000
@6%
P1,200
(1,080)
P120
P240
(4)P30,000
Gross Gifts
Mortgage assumed
Net Gift
Less: Exempt gift
Net Taxable gift
Donor’s Tax Due
Feb. 15, 2018
Mr.Macariola
P200,000
(50,000)
P150,000
(250,000)
PP0; exempt
Gross Gifts
Prior net gift
Net gift
Less: Tax exempt gift
Net Taxable Gift
Donor’s Tax Due @ 6%
Donor’s tax paid
Donor’s Tax Payable
March 30, 2018
Mr.Macariola
P200,000
150,000
P350,000
(250,000)
P100,000
6,000
P6,000
Mrs.Macariola
P200,000
(50,000)
P150,000
(250,000)
PP0; exempt
Total
Mrs.Macariola
Total
P-
P-
P6,000
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
June 1, 2018
Mr.Macariola
P-
Gross Gifts
Prior net gift
Net gift
Less: tax exempt gift
Net Taxable gift
Donor’s Tax Due
October 12, 2018
Mr.Macariola
P400,000
(50,000)
350,000
P700,000
(250,000)
P450,000
6%
P27,000
(6,000)
P21,000
Gross Gifts (P400k+P400k)/2
Less: Mortgage assumed
Prior net gift
Net gift
Less: tax exempt gift
Net Taxable Gift
x
Donor’s Tax Due
Less: Donor’s Tax Paid
Donor’s Tax Payable
October 12, 2018 - CLIFFORD
Gross gift
Less: Tax exempt gift
Net Taxable gift
Tax Due
TRUE OR FALSE
1. TRUE
2. TRUE
3. FALSE
4. TRUE
5. TRUE
6. TRUE
MULTIPLE CHOICE
1. A
2. A
3. C
4. C
5. B
6. D
7. D
8. D
9. D
10. C
11. D
12. A
24 |
Mrs.Macariola
P100,000
150,000
250,000
(250,000)
P0
P0
Total
Mrs.Macariola
P400,000
(50,000)
250,000
P600,000
(250,000)
P350,000
6%
P21,000
(6,000)
P15,000
Total
P0
P36,000
P100,000
(250,000)
P0
P0; exempt
7.
8.
9.
10.
11.
12.
FALSE
TRUE
FALSE
FALSE
TRUE
FALSE
13.
14.
15.
16.
17.
18.
FALSE
FALSE
FALSE
FALSE
FALSE
FALSE
19.
20.
21.
22.
23.
24.
TRUE
FALSE
FALSE
FALSE
FALSE
TRUE
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
C
D
B
D
A
B
C
B
C
A
D
C
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
D
D
B
D
D
B
A
A
B
A
B
B
37.
38.
39.
40.
41.
42.
B
C
D
A
B
C
25.
26.
27.
28.
29.
30.
TRUE
TRUE
FALSE
TRUE
FALSE
FALSE
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
Supporting computation:
No. 27.
Gross Gifts (5M/2)
Less: Tax Exempt Gift
Net taxable gift
P2,500,000
(250,000)
P2,250,000
No. 30 and 31. TRAIN Law
Net gift – Feb. 29
Less: Donation to the government
Net taxable gift – Feb. 29
P500,000
(P500,000)
P-; exempt
Gross gift April 1
Mortgage assumed by the donee
Net Gift
Less: Tax exempt gift
Net Taxable Gift
Donor’s Tax Due @ 6% (#30)
P1,000,000
(500,000)
P500,000
(250,000)
P250,000
P15,000,
Net gifts, May 31
PNG-April 1
Cumulative Net gift, May 31
Less: Tax exempt gift
Net taxable gift
x
Total
Less: Donor’s tax paid April 1
Donor’s tax payable, May 31 (#31)
P5,000,000
500,000
P5,500,000
(250,000)
P5,250,000
6%
P315,000
(15,000)
P300,000
No. 32. TRAIN LAW
Net gifts of the spouses, March 1
Divide by
Net gift, Mr. Mapagbihay, March 1
Tax exempt gift
Taxable net gift, Mr. Mapagbigay
Donor’s Tax Due, Mr. Mapagbigay
P500,000
2
P250,000
(250,000)
P0
P0
No. 33.
Net gifts of the spouses, May 1
Add: Prior net gift, March 1
Cumulative net gift
Divide by
Cumulative Net gift, Mrs Mapagbigay
Less: Tax exempt gift
Cumulative taxable net gift
x
Donor’s tax due
Less: Donor’s tax paid, March 1
Donor’s Tax Payable
25 |
P400,000
500,000
P900,000
2
P450,000
(250,000)
P200,000
6%
P12,000
P12,000
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
No. 34.
Total gifts of the spouses (P1.1M/2)
Less: Exempt gifts
Net Taxable gift
x
Donor’s tax due per spouse
Total donor’s tax due of the spouses
No. 35. TRAIN LAW
Gross gift-Jan. 24
Mortgage assumed by the donee
Net gift
Less: tax exempt gift
Taxable Net Gift
Donor’s Tax Rate (TRAIN Law)
Donor’s tax due/payable
Mr.
Mrs.
P550,000
P550,000
(250,000)
(250,000)
P300,000
P300,000
6%
6%
P18,000
P18,000
P36,000
P2,000,000
(500,000)
P1,500,000
(250,000)
P1,250,000
6%
P75,000
No. 36. TRAIN LAW
Net gift-Nov. 30
Net gift-Jan. 24
Cumulative Net gift
Less: tax exempt gift
Taxable Net Gift
Donor’s Tax Rate (TRAIN Law)
Total donor’s tax due
Less: Donor’s tax paid-Jan. 24
Allowable Donor’s tax credit:
Limit = 4.5/6 x P345,000 = P258,750
Vs. Actual = 400,0000
Donor’s tax due/payable
P4,500,000
1,500,000
P6,000,000
(250,000)
P5,750,000
6%
P345,000
(75,000)
(258,750)
P11,250
CHAPTER 7 – BUSINESS TAXES
MULTIPLE CHOICE
1. A
2. D
3. D
4. D
5. B
26 |
6.
7.
8.
9..
10.
B
C
D
C
D
11.
12.
13.
14.
15.
C
B
C
A
D
16.
17.
18.
19.
20.
C
D
D
A
D
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
CHAPTER 8 – VALUE ADDED TAX
PROBLEM SOLVING
P8.1
Residential Units:
Case A
Exempt
Case B
OPT
Case C
OPT
Case D
Vat
Commercial Units:
Case E
Vat
Case F
OPT
Case G
OPT
Case H
Vat
P8.2
Case A
Case B
Case C
Case D
X
X
V
V
Case E
Case F
Case G
Case H
V
X
V (0%)
V
Case I
Case J
V
X (OPT)
P8.3
a)
b)
c)
d)
nil
Vat Payable = P134,400 x 3/28 = P14,400
Vat Payable = OV P201,600 x 3/28 – Input Vat P14,400 = P7,200
nil
P8.4
Cash Sales
Sales on account
Transactions deemed sale (22,400+16,800+19,040+8,960)
Total sales subject to vat
x
Output Vat
Less: Input vat (P291,200 x 3/28)
Vat Payable
P660,800
246,400
67,200
P974,400
3/28
P104,400
(31,200)
P73,200
P8.5
OUTPUT:
Sales (P8M – 400,000) x 12%
Sales from consignment (March and Feb.)
(20+10) x P10,000 x 12%
Transactions deemed sales
January 8 consignment (20 x P10,000) x 12%
Goods withdrawn
Goods taken as payment to creditors
INPUT VAT
Purchase of goods, supplies, freight/insurance)
Capital goods (P1,100,000 x 12%) / 48 mos.
VAT PAYABLE
27 |
P912,000
36,000
24,000
6,000
3,600
82,080
2,750
P981,600
(84,830)
P896,770
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
P8.6
Sale of school supplies
Sale of gift items
Sales subject to output vat
x
Output Vat
Less:
§
Input vat on purchases directly attributable to vatable sales
(Purchase of school supplies and gift items)
P1,344,000 x 3/28
§
Input vat on purchases attributable to vatable and nonvatable
sales (Purchase of computers)
P448,000 x 3/28 x (2,400/3,600)**
§
Purchase of office supplies used in vatable and non-vatable
transactions from non-vat registered suppliers
Vat Payable
**Total Vatable Sales net of vat = P2,400,000
Non-vatable sales = P1,200,000
Total Sales, net (vatable and non-vatable) = P3,600,000
P1,680,000
1,008,000
P2,688,000
3/28
P288,000
P144,000
P32,000
nil
(176,000)
P112,000
P8.7
Output Vat (P896,000 x 3/28)
Less: Input vat
P96,000
§
P224,000 x 3/28
§
P112,000 x 3/28 x 80%
§
P2,240 x 3/28 x 80%
Vat Payable
(24,000)
(9,600)
(192)
P62,208
Note:
The input vat on capital goods is not amortized because the
acquisition cost is not more than P1M.
The ratio of vatable sales to total sales = 80%
P8.8
(a)
Total Input Vat (P374,000 + 69,848 + 154,000 + 55,000) x 3/28 =
P69,948
(b)
Output vat (P330,000 + P274,996) x 3/28
P64,821
Less: Input vat (P374,000 + 69,848 + 154,000) x 3/28
(69,984)
Vat Payable
(P5,163)
Note:
§
Sale to export oriented enterprise is considered is subject to 12% vat under the TRAIN Law.
§
The input vat on purchase of goods intended for export may be refunded, deducted from output vat or converted to
a tax credit certificate.
28 |
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
P8.9
(a) P28,800
(b) P12,600
Output Vat (P350,000 x 12%)
Less:
§
Input vat on importation:
CIF (cost, insurance, freight) value
Charges/expenses incurred in claiming the goods:
Wharfage
Arrastre
Customs duty
Brokerage fee and documentary stamps
Facilitation expense = bribe; illegal payment; not included in
the computation
Marine cargo insurance
Total
x
§
Input vat on Freight from customs to warehouse
Vat Payable
P42,000
P229,195
1,540
2,295
4,090
330
2,550
P240,000
12%
(28,800)
(600)
P12,600
P8.10
(a)
1st Quarter
Output Vat (P3M x 12%)
INPUT VAT:
Purchases (P1.2M x 12%)
Purchase of machinery (P2.5M x 12%) / 36 x 3mos.
Unused input vat as of end of 2017
Vat Payable
P360,000
(144,000)
(25,000)
(125,000)
P66,000
(b)
2nd Quarter
Output Vat (4.8M x 12%)
Input Vat
Purchases (P3M x 12%)
Unused input vat on capital goods (P2.5M x 12%-25,000)
Excess Input vat
P576,000
(360,000)
(275,000)
(P59,000)
P8.11
Output vat (P336,000 x 12%)
Input vat:
On purchases (P112,000 x 3/28)
Transitional input vat:
Higher between 2% of beg. Invty vs. P10,000
Vat Payable
29 |
P40,320
(12,000)
(10,000)
P18,320
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
P8.12
(a)
(b)
P3,400
P80,000
Output vat (P800,000 x 12%)
Less: Input Vat
Presumptive I.V (P85,000 x 4%)
Purchased of olive oil (P67,200 x 3/28)
Purchased of can containers (P25,000 x 12%))
Payments for paper labels (P12,000 x 12%)
Purchased of cardboard for boxes (P8,960 x 3/28)
Payments for hauling services
Vat Payable
P96,000
(3,400)
(7,200)
(3,000)
(1,440)
(960)
nil
P80,000
P8.13
Output vat (672,000 x 3/28)
P72,000
Less: Input Vat
Purchased of bottles (P22,400 x 3/28)
(2,400)
Purchased of can containers (P50,000 x 12%)
(6,000)
Payments for paper labels (P5,600 x 3/28)
(600)
Purchased of cardboard for boxes (P3,360 x 3/28)
(360)
Payments for hauling services (P60,000 x 12%)
(7,200)
Vat Payable
P55,440
& The taxpayer (processor of fruits) is not entitled to presumptive vat
P8.14
Subject to Value Added Tax
Hotel rooms (P1.8M x 12%)
Dining Hall:
Sale of food and refreshments (P2.2M x 12%)
Sale of wine, beer and liquor (P950,000 x 12%)
Other revenues (P700,000 x 12%)
Subject to Percentage Tax (Amusement Tax)
Disco:
Sale of food and refreshments (P1.6M x 18%)
Sale of wine, beer and liquor (P1.2M x 18%)
TOTAL BUSINESS TAXES
P216,000
264,000
114,000
84,000
288,000
216,000
P1,182,000
P8.15
OUTPUT VAT based on collections
(15M + 10M + 5M)
INPUT VAT on purchases from:
Alpha (P12M – 1.2M) x 12%
Bravo (non-vat reg.)
Charlie (P4M – 1M) x 12%
Delta (P2M x 12%)
Vat Payable
30 |
P3,600,000
(1,296,000)
(360,000)
(240,000)
P1,704,000
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
P8.16
Output vat ((P4M – 2.5M) x 12%
Less: input vat (P800,000 x 12%)
Vat Payable
P180,000
(96,000)
P84,000
P8.17
Ratio of Initial Payment over Selling Price:
Lot A = 50/250 = 20% ; Installment Sale
Lot B = 70/200 = 35%; Deferred Sale; Treated as Cash Sale
Lot C = 60/300 = 20%; Installment Sale
Nov. 2018
P3,000
24,000
4,800
P31,800
Lot A: P25,000 x 12%; P25,000 x 12%
Lot B: P200,000 x 12%
Lot C: P40,000 x 12%; P20,000 x 12%
Vat Payable
Dec. 2018
P3,000
2,400
P5,400
P8.18
a)
b)
Output vat September 2018 = P3M x 12% = P360,000
The sale is a Deferred sale. Ratio of initial payments over SP is 30%.
Output vat January 2019 = P0
P8.19
Room charges
Laundry services
Food and beverages
Corkage
Handling charges for providing telephone,
telex, cable or fax services
Cake shop sales
Total
Vat rate
Output Vat for the month
31 |
P1,000,000
25,000
1,500,000
15,000
4,500
80,000
P2,624,500
12%
P314,940
TRUE OR FALSE
SET A
1. T
2. F
3. F
4. T
5. T
6.
7.
8.
9.
10.
F
F
F
T
T
11.
12.
13.
14.
15.
F
F
F
F
F
16.
17.
18.
19.
20.
T
F
F
T*
T
21.
22.
23.
24.
25
F
F
T
F
T
SET B
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
F
F
F
T
F
11.
12.
13.
14.
15.
F
F
T
F
T
16.
17.
18.
19.
20.
T
T
T
F
F
21.
22.
23.
24.
25
T
T
T
T
F
T
T
T
F
F
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
MULTIPLE CHOICE
1. D
2. C
3. A
4. D
5. D
6. D
7. D
8. D
9. A
10. C
11. C
12. A
13. A
14. D
15. C
16. C
17. A
18. D
19. D
20. D
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
C
A
C
D*
C
A
B**
B
C
B
B
D
A
B
B
B
B
B
C
A
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
B
C
D
D
B
D
D
C
C
D
B
C
B
D
D
C
A
A
C
A
61.
62.
63.
64.
65.
66.
67.
68.
69.
70.
71.
72.
73.
74.
75.
76.
77.
78.
79.
80.
C
B
C
D
A
C
B
D
A
D
D
A
D
B
C
D
C
D
C
B
81.
82.
83.
84.
85.
86.
87.
D
A
B
C
C
C
D
Supporting Computations/explanations:
No. 12
“III” is exempt only if contribution per member is not more than P15,000.
No. 20
Output Vat (P2,805,500 +P1,524,000) x 12%
P519,540
Input vat (P1,102,200+P1,012,500) x 12%
(253,746)
Vat Payable
P265,780
No. 21
Output Vat, 3rd quarter (P150,000 x 12%)
Input vat, 3rd quarter (P120,000 x 12%)
Deferred input vat – previous quarter
Vat Payable (Carry-over)
No. 27
P18,000
(14,400)
(6,000)
(P2,400)
**Letter “B” is no longer considered export sale upon \the effectivity of the TRAIN Law.
No. 37
AR, July 1
Billings, July-Sept.
AR, Sept. 30
Collections
Output vat @ 12%
Input vat on purchases @ 12%
Vat Payable
32 |
P180,000
850,000
(120,000)
P910,000
109,200
(57,600)
P51,600
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
No. 38
Output vat (P5.5M x 12%)
Input vat on materials
Vat Payable September
P660,000
(180,000)
P480,000
Output vat (P10M x 12%)
Input vat on materials
Input vat on capital goods
(P3Mx12%) /60 mos.
Vat Payable June 30
P1,200,000
(480,000)
(36,000)
No. 39
P684,000
No. 41
Sales, shares held as inventory
Cos of shares, held as inventory
Gross income
Vat rate
Output vat
Les: Input vat
Supplies expense
Rent expense
Vat payable
P5,000,000
(2,000,000)
3,000,000
12%
P360,000
12,000
24,000
(36,000)
P324,000
No. 49
Domestic sales (P600,000 x 12%)
Add: Transaction deemed sales
Jan. 4 consignment (P200,000 x 12%)
Goods consumed on Fe. 27 (P50,000 x 12%)
Property dividends (P150,000 x 12%)
Total Output Vat
P72,000
24,000
6,000
18,000
P120,000
No. 66 & 67
Output vat (P592,480 x 3/28)
Less: Input Vat
Purchases of goods (P100,000 x 12%)
Purchases of services (P20,000 x 12%)
Transitional input vat
VAT Payable
P63,480
P12,000
2,400
4,800
(19,200)
P44,280
No. 72
Output Vat for October 2018 = P3M x 12 = P360,000
v Ratio of Initial Pay’t over Gross S.P. = P900,000/P3,000,000 = 30%
v If initial payment is more than 25% of Selling Price, the sale is classified as Deferred Sale which is treated as Cash Sale.
Therefore, the entire output vat is due on the month of sale.
No. 73
Output Vat for 2019 = P0;
33 |
The entire output vat was paid in 2018
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
No. 74
Downpayment
1st installment payment
Total (vat inclusive)
Less: VAT (P224,000 x 3/28)
Initial Payment (exclusive of vat)
Divide by contract Price (P1,120,000 x 3/28)
Ratio of Initial Payment over SP
Output vat for 2018 (P200,000 x 12%)
P112,000
112,000
224,000
(24,000)
P200,000
1,000,000
20%
P24,000
No. 75
VAT ON CASH SALE:
(ZV is higher than SP) (P600,000 x 12%)
VAT ON DEFERRED SALE:
(Ratio of Initial payment over SP > 25%
(Deferred Sale)
(Treated as cash sale; SP is higher than FMV)
[(P336,000/1.12) x 12%]
TOTAL OUTPUT VAT
P72,000
36,000
P108,000
No. 78 and 79
Output vat (P336,000 x 3/28)
Input vat (56,000 + 11,200) x 3/28 x 300/500
Vat Payable
P36,000
(4,320)
P31,680
No. 80
OUTPUT VAT (P896,000 x 3/28)
INPUT VAT
Purchases of goods, vat business, vat included
(P224,000 x 3/28)
MIXED Transactions:
Purchases of supplies, for vat & non vat business
[(112,000 x 3/28) x (800,000/1,000,000)]
Purchase of depreciable asset, for use in vat and non vat business
[(P2,240 x 3/28) x (800,000/1,000,000)]
VAT PAYABLE
P96,000
(24,000)
(9,792)
P62,208
No. 81 and 82
OUTPUT VAT
Domestic sales (P330,000 + P274,996) x 3/28
Export sales (zero rated)
INPUT VAT
Purchases of goods, supplies and services for domestic sales and for export (374,000 + 69,848
+ 154,000 + 55,000) x 3/28
Vat Payable
P64,821
0
(69,948)
(P5,127)
No. 83
Raw Materials (P560,000 x 3/28) x 400,000/1M
Supplies (P448,000 x 3/28) x 400,000/1M
Equipment (P300,000 x 12% x 400,000/1M)
INPUT VAT ATTRIBUTED TO EXPORT SALES
34 |
P24,000
19,200
14,400
P57,600
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
CHAPTER 9 – OTHER PERCENTAGE TAXES
PROBLEM SOLVING
P9.1
1. A
2. F
3. F
4. A
5. A
6. F
7. C*
8. C*
9. C*
10. A
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
A
A
A
A
A
F
C
C
A
C
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
A
A
A
C
C
C
F
F
A
C
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
C
A
A
A
B
F
A
F
A
E
41.
42.
43.
A
F
A
*#7 to #9: Assume the taxpayer is domestic common carrier by land. It is subject to OPT under Section 117.
#7-9: It is subject to OPT under Section 116
#18: Subject to Section 118 as to its cargo operations only
P9.2
1)
2)
3% OPT on vat exempt sales (GR<3,000,000 & non-vat registered) =P1,275,000 x 3% = P38,250
Business Tax Due = P0; The taxpayer opted to be taxed at 8% (qualified) which is in lieu of the Basic Income Tax
Due and Business Tax Due under Section 116 of the Tax Code, as amended under TRAIN Law.
1)
Gross sales/receipts and other non-operating income = P1.8M + (570,000/95%) = P2.4M
Business Tax = P2.4M x 3% under Sec. 116 = P72,000
2)
Business Tax Due = P0; The taxpayer opted to be taxed at 8% (qualified) which is in lieu of the Basic Income Tax
Due and Business Tax Due under Section 116 of the Tax Code, as amended under TRAIN Law.
3)
VAT = P2.4M x 12% = P288,000
1)
Gross sales/receipts and other non-operating income = P1,275,000
Business Tax = P1,275,000 x 3% under Sec. 116 = P38,250
The compensation income is not subject to business tax.
2)
Business Tax Due = P0; The taxpayer opted to be taxed at 8% (qualified) which is in lieu of the Basic Income Tax
Due and Business Tax Due under Section 116 of the Tax Code, as amended under TRAIN Law.
P9.3
P9.4
P9.5
Gross receipts-passenger operations by land
P240,000
(P8,000,000 x 3% CCT)
Gross receipts cargo operations
450,000
(P5M x 75% x 12%vat)
Rentals (P2M x 12%vat)
240,000
Total business taxes
P930,000
& The basis of business tax in this particular problem shall be collections because the taxpayer is engaged in sale of
services.
P9.6
35 |
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
1)
Taxpayer is non-vat registered
Gross receipts
P2,400,000
Add: AR, beginning
500,000
Less: AR, end
(600,000)
Collections
2,300,000
x
3%
Business Taxes under
P69,000
Sec. 116
& The basis of business tax in this particular problem shall be collections because the taxpayer is engaged in sale of
services.
& The taxpayer is non-vat registered and the total gross receipts ≤ P3,000,000, hence, subject to 3% OPT under
Section 116 of the Tax Code, as amended.
2)
Taxpayer is vat registered
Gross receipts
P2,400,000
Add: AR, beginning
500,000
Less: AR, end
(600,000)
Collections
2,300,000
x
12%
Business Taxes under Sec.
P276,000
116
& The basis of business tax in this particular problem shall be collections because the taxpayer is engaged in sale of
services.
& Although the total gross receipts ≤ P3,000,000, the taxpayer is vat registered. Hence, subject to 12% vat
P9.7
1)
Income tax due = P400,000
§
GR Passenger operations-Phils.
§
GR cargo operations-Phils.
Total
GPB rate
Income Tax Due
P10,000,000
6,000,000
16,000,000
2.5%
P400,000
2)
Income tax due using preferential tax rate of 2% per treaty = P320,000
§
GR Passenger operations-Phils.
P10,000,000
§
GR cargo operations-Phils.
6,000,000
Total
16,000,000
GPB rate
2%
Income Tax Due
P320,000
3)
Business tax due = 3% CCT on cargo operations originating in the Philippines
= 3% x P6M = P180,000
P9.8
36 |
1.
P0. Not subject to business tax but subject to a capital gains tax of P7,500.
[(5,000 sh. X P50) – P200,000 = P50,000 capital gain x 15%CGT under TRAIN Law = P7,500 CGT
2.
P0. Not subject to business tax as well as income tax (CGT). The transaction resulted to a loss amounting
to P75,000, hence, not subject to CGT.
Purchase Price = P50/share; S.P.=P35/share; Loss = P15/share
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
3.
5.
Subject to P6,000 value added tax
[(5,000 sh. X P50) – P200,000 = P50,000 capital gain x 12% = P6,000
A dealer in securities is subject to 12% value added tax based on gross income
Subject to OPT (stock transaction tax) of P720 computed as follows:
P120,000 x .006 (TRAIN Law) = P720
OPT = 5,000 shares x P18 x .006 = P540
1.
2.
P3,000 OPT.
P120 OPT.
1.
2.
3.
4.
P1,053,000 OPT (amusement tax).
P5,850,000 x 18% = P1,053,000
P720,000 OPT.
P4M x 18% = P720,000
P55,500 OPT.
P1,850,000 x 3% = P55,500
P198,000 VAT.
(P1850,000 x 12%) – (P224,000 x 3/28)] = P198,000
1.
P501,250 computed as follows:
4.
P9.9
ratio=10/35=28.5%; IPO rate= 2%; Tax due on=P150,000 x 2% = P3,000
P20,000 x .006 = P100
P9.10
P9.11
Interest and commission income from lending activities with
maturity of 3 years
Interest and commission income from lending activities with
maturity of 5 years
Interest and commission income from lending activities with
maturity of 7 years
Other income from rentals of facilities and other assets
Income from financial leasing (remaining maturity is more than
5 yrs)
Dividends and equity shares in net income of subsidiaries
Net trading gain (loss)
Total Gross Receipts Tax
2.
st
%
5%
Business Tax
P200,000
3,500,000
5%
175,000
6,000,000
1%
60,000
775,000
1,200,000
7%
1%
54,250
12,000
500,000
(150,000)
0%
NA
P501,250
2 Quarter
P2,800,000
nd
%
5%
Business Tax
P140,000
3,300,000
5%
165,000
7,200,000
1%
72,000
825,000
950,000
7%
1%
57,750
9,500
400,000
175,000
0%
7%
1,750
P446,000
P446,000
Interest and commission income from lending activities with
maturity of 3 years
Interest and commission income from lending activities with
maturity of 5 years
Interest and commission income from lending activities with
maturity of 7 years
Other income from rentals of facilities and other assets
Income from financial leasing (remaining maturity is more than
5 yrs)
Dividends and equity shares in net income of subsidiaries
Net trading gain net of loss (P325,000-150,000)
Total Gross Receipts Tax
37 |
1 Quarter
P4,000,000
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
TRUE OR FALSE
1. FALSE
2. TRUE
3. TRUE
4. FALSE
5. FALSE
6. FALSE
7. FALSE
8. TRUE
9. TRUE
10. FALSE
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
TRUE
FALSE
FALSE
TRUE
TRUE
TRUE
FALSE
FALSE
TRUE
FALSE
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
FALSE
TRUE
TRUE
FALSE
FALSE
TRUE
TRUE
TRUE
TRUE
FALSE
#4. False. Shall be either 0%vat or vat exempt only
#6. False. Shall be whichever is higher. However, the application of minimum quarterly receipts has been suspended.
#7.False, CCT is based only on GR from cargo operations.
#9. True. For business tax purposes only; sources within for income tax purposes
#13. False. Shall be from the government
#14. True. i.e., Radio/television broadcasting companies whose GR exceeds the vat threshold of P10M preceding
year.
MULTIPLE CHOICE
1. B
21. D
41. A
61. A
81. D
2. D
22. A
42. A
62. C
82. D
3. D
23. A
43. A
63. C
83. C
4. C
24. A
44. D
64. A
84. A
5. D*
25. B
45. C
65. A
85. P1,440
6. C
26. A
46. A
66. D
7. A
27. B
47. D
67. D
8. A
28. D
48. B
68. A
9. D
29. B
49. A
69. B
10. A
30. C
50. B
70. B
11. A
31. A
51. B
71. C
12. A
32. C**
52. C
72. A
13. C
33. D
53. C
73. B
14. D
34. B
54. C
74. C
15. A
35. D
55. B
75. B
16. B
36. D
56. B
76. B
17. C
37. D
57. A
77. A
18. D
38. D
58. C
78. C
19. B
39. A
59. C
79. C
20. B
40. C
60. D
80. C
*Items I and II are not subject to business taxes while item III is subject to Sec. 117 instead of Sec. 116
**For Inte’l Carriers, passenger operation is exempt from business tax.
38 |
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
Supporting Computations:
No. 6
OPT on sale of refined sugar and cooking oil = (P500,000 + 500,000) x 3% = P30,000
No. 7
(P280,000 + P220,000) x 3% = P15,000
No. 8
Collections = P50,000 + 100,000 – 75,000 = P75,000
OPT = P75,000 x 3% = P2,250
No. 9
Gross receipts (refer to #6)
x vat rate
Output vat
Input vat (P11,200 x 3/28)
Vat Payable
No. 10
No. 19
No. 20
No. 21
No. 22
No. 23
No. 26
No. 27
No. 28
No. 29
No. 30
P75,000
12%
P9,000
(1,200)
P7,800
VAT Payable = (P1,350,000 + 625,000 – 1,200,000) x 12% = P93,000
P6.5M x 12% vat = P780,000
P660,00 x 3% = P19,800
(P400,000 + P100,000) x 12% = P60,000; shall be based on collections
CCT = (P800,000 + 400,000) x 3% = P36,000
CCT = [(100,00-18,000) + (165,000-13,500) + 90,000 + 35,500] x 3% = P10,770
P10M x 2.5% = P250,000
P10M x 1.5% = P150,000
exempt
B
(P10M x 40%) 3% = P120,000
No. 37
AR, beg.
Revenues (P4M + P1M)
AR, end
Gross receipts
Vat rate
Business tax due
P600,000
5,000,000
(960,000)
P4,640,000
12%
P556,800
No. 38
Covered by the Franchise
AR, beg.
Revenues
AR, end
Gross receipts
Franchise tax rate
Business tax due
Total Business Taxes
P600,000
4,000,000
(800,000)
P3,800,000
2%
P76,000
P176,800
NOT Covered by the Franchise
AR, beg.
Revenues
AR, end
Gross receipts
Franchise tax rate
Business tax due
P---1,000,000
(160,000)
P840,000
12%
P100,800
No. 39
No. 45
2017 = P9M x 3% = P270,000; 2018 = P12M x 3% = P360,000
P3M x 10% = P300,000
39 |
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
No. 46
Output vat (P5M x 12%)
Input Vat
§
P300,000 x 12%
§
P800,000 x 12% x 5/8
Vat Payable
No. 48
P600,000
(36,000)
(60,000)
P504,000
Statement 2 is False. The rate shall be 4% (twice the rate of Section 123 NIRC)
No. 54
OPT%
Interest income from lending activities from
inst1uments with remaining terms of:
Five years and less
More than five years
Dividends & equity shares from subsidiaries
Rental income
Net trading gains
Total Gross Receipts Tax
GRT
5,000,000
3,000,000
1,000,000
500,000
300,000
5%
1%
0%
7%
7%
P250,000
30,000
0
35,000
21,000
P336,000
P880,000
220,000
660,000
110,000
30,000
220,000
OPT%
7%
7%
7%
7%
0%
7%
GRT
P61,600
15,400
46,200
7,700
0
15,400
700,000
800,000
5%
1%
35,000
8,000
P189,300
No. 55
Rentals from safety deposit boxes
Net foreign exchange gains
Net trading gains from trading of securities
Trust fees
Dividends from domestic corporations
Other service fees
Interest income from lending activities from
inst1uments with remaining terms of:
Five years and less
More than five years
Total Gross Receipts Tax
No. 56
Interest income with maturity of less than 5 years (P500,000 x 5%)
Rentals (P500,000 x 7%)
Net trading loss = none; if net trading gain, tax is 7%
Gross receipt tax (GRT)
P25,000
35,000
P60,000
No. 57
Interest income with maturity of less than 5 years (P1M x 5%)
Rentals (P500,000 x 7%)
Net trading gain
[200,000 – (100,000 net trading loss previous month) x 7%]
Gross receipt tax (GRT)
40 |
P50,000
35,000
7,000
P92,000
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia
No. 58
Interest withheld and paid (P100,000 x 5 years x 1%)
Adjusted amount of tax due to pre-termination (P100,000 x 5 years x 5%)
Tax Payable
No. 60
No. 61
No. 62
No. 67
No. 69
No. 72
No. 73
No. 75
(P5,000)
25,000
P20,000
OPT under Sec. 124 = P2M x 4% = P80,000
[(P500,000 x 12%)-(300,000x12%)] = P24,000
P2M x 2% = P40,000
P5,425 x 18% = P976,500
P425,000 x 3% = P12,750
Amusement tax = exempt
Amusement tax = (P5M + 3M) x 10% = P800,000
Double = P200 bet/P20 per ticket = 10 tickets;
10 tickets x P180 net winnings per ticket x 4% = P72
Ordinary (winner take all) = P500 bet/P50 per ticket = 10 tickets;
= 10 tickets x P950 net winnings per ticket x 1% = P950
Forecast = Bet P1,000/20 per ticket = 50 tickets
= 50 tickets x P80 net winnings per ticket x 4% = P160
TOTAL = P1,182
No. 80
No. 82
OPT = P350,000 x .005 = P1,750
Vat = (P1.5M – P1M) x 12% = P60,000
No. 83
No. 84
No. 85
(120,000 – 30,000) x ½ x P30 x 1% = P13,500;
Ratio = 45/75 = 60%; IPO rate = 1%
(2,000 x P25 x 4% = P2,000;
Ratio = 2/75 = 2.67%; IPO rate = 4%
OPT = 6,000 x P40 x .006% = P1,440
CHAPTER 10 – TAX REMEDIES
MULTIPLE CHOICE
1. D
2. B
3. C
4. A
5. D
6. D
7. C
8. D
9. D
10. D
11. D
12. D
13. C
14. B
15. D
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
A
D
C
B
C
C
D
B
B
C
B
C
C
B
C
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
D*
D
B
B
B
B
C
A
C
D
D
D
A
D
A
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
D
A
A
A
D
D
D
B
D
A
B
B
A
D
C
61.
62.
63.
64.
65.
66.
67.
68.
69.
70.
71.
72.
73.
74.
75.
A
D
D
C
B
B
B
B
A
A
D
A
D
D
C
#17. The sixty (60)-day period for the submission of all relevant supporting documents shall not apply to requests for reconsideration under RR 18-2013.
#23. (the taxpayer has, nonetheless, the option to wait for the decision of the BIR even beyond the 180 day period nder RR 18-2013.)
If the protest is not acted upon by the Commissioner’s duly authorized representative within one hundred eighty (180) days, THE TAXPAYER MAY
EITHER:
a)
Appeal to the CTA within thirty (30) days after the expiration of the one hundred eighty (180)-day period; or
b)
Await the final decision of the Commissioner’s duly authorized representative on the disputed assessment.
41 |
Transfer & Business Taxation(2020 Edition) by Tabag and Garcia