5. A husband and wife, resident citizens, with one (1) qualified dependent child, had the following
income and expenses for the year 2009. The husband waived the additional exemption in favor of
his wife.
Salary of the husband, net of P50,000 withholding tax
P 450,000
Salary of the wife, gross of P60,00 withholding tax
600,000
Gross professional income, husband, gross of 15% withholding tax
1,500,000
Cost of services-husband
500,000
Expenses, practice of profession
300,000
Gross sales, wife
800,000
Cost of sales wife
300,000
Business expenses, wife
100,000
Gross rent income, lease of common property, gross of 5% withholding tax
700,000
Expenses, leased common property
200,000
Business income, Singapore
600,000
Business expenses, Singapore
150,000
Question 1 - How much was the taxable income of the husband and wife using itemized
deduction?
2 – How much was the taxable income of the husband and wife using optional
standard deduction?
Itemized Deduction
Husband
P500,000
Item
Salary-Wife
Salary-Husband
Less: Basic Personal Exemption
Additional Exemption
Taxable Compensation Income (A)
50,000
P450,000
Wife
P600,000
50,000
25,000
P525,000
Gross Professional Income
Cost of services-husband
Expenses-Profession
Gross sales Wife
Cost of sales-Wife
Business expense-Wife
Gross rent income (700,000/2)
Expenses leased property (200,000/2)
Business Income Singapore (600,000/2)
Business expenses, Singapore (150,000/2)
Net income from Business & Profession (B)
1,500,000
(500,000)
(300,000)
350,000
(100,000)
300,000
(75,000)
P1,175,000
800,000
(300,000)
(100,000)
350,000
(100,000)
300,000
(75,000)
P875,000
Taxable Net income (A+B)
P1,625,000
P1,400,000
Optional Standard Deduction
Husband
P500,000
Item
Salary-Wife
Salary-Husband
Less: Basic Personal Exemption
Additional Exemption
Taxable Compensation Income (A)
50,000
P450,000
Wife
P600,000
50,000
25,000
P525,000
Gross professional income
Gross sales
Gross rent income (700,000/2)
Business Income Singapore (600,000/2)
Total
Less: OSD (40%) Total *40%
Net income Business and Profession (B)
P1,500,000
350,000
300,000
2,150,000
860,000
1,290,000
P800,000
350,000
300,000
1,450,000
580,000
870,000
Taxable net income
1,740,000
1,395,000
8) Exercises
a. An individual taxpayer holds shares of stock as investment. During the current year, he sold the
shares he bought for P100,000 for P180,000 directly to a buyer. How much is the capital gains
tax on the sale if any?
b. An individual taxpayer holds shares of stock as investment which he bought for P500,000.
During the current year, he sold it directly to a buyer for P750,000. How much is the capital
gains tax on the sale, if any?
c. An individual taxpayer invested P300,000 in the common shares of SMC Corp. During the
current year, he sold these shares directly to a buyer for P250,000. How much is the capital
gains tax on the sale, if any?
d. During the year 2011, Ms. Kat Antonio sold her vacation house for P500,000. She acquired it
for P700,000 two (2) years ago. The fair market value of the vacation house at the time of sale
was P800,000. Ms. Antonio was going to use the proceeds to build her new principal residence
within eighteen (18) months after informing BIR within thirty (30) days of such intention. How
much is the capital gain tax, if any?
e. Mr. C. Avenido acquired his principal residence in 2009 at a cost of P1,000,000. He sold the
said property on January 1, 2011, with a fair market value of P5,000,000 for a consideration of
P4,000,000. Within the 18-month reglementary period he purchased his new principal residence
at cost of P7,000,000.
Question 1 - How much is the capital gains tax due?
2 - How much is the basis of the new principal residence?
f. Using the same data in letter d, if for example, Mr. Avenido acquired his new principal residence
within the 18-month reglementary period but did not utilize the entire proceeds of the sale in
acquiring his new principal residence because he only used P3,000,000 thereof in acquiring his
new principal residence.
Question 1 - How much is the capital gains tax?
2 - How much is the basis of the new principal residence?
Answers:
A. P4,000
B. P20,000
C. Zero- Listed Corporation
D. SP-500,000
FMV-800,000
The capital gains tax is P800,000 times 6% =48,000
The transaction is subject to CGT because the taxpayer BUILD his new residence and does
not purchase. It must be noted that the tax code states that it must be purchased or bought.
E. Cost- 1,000,000
Selling Price-4,000,000
FMV-5,000,000
Utilized (purchase of new residence)-7,000,000
1 - How much is the capital gains tax due?
P0 (He used all of the proceeds or the selling price to purchase a new residence)
2 - How much is the basis of the new principal residence?
Historical cost + Additional Cost
1,000,000 + 3,000,000* = P4,000,000
* 7,000,000 -4,000,000
F. 1 - How much is the capital gains tax?
Unutilized /TotalSelling price X Escrow (Capital gains Tax should be)
1M*/4M X 300,000 = P75,000
* 4M-3M=1M
2 - How much is the basis of the new principal residence?
Utilized/Total X Historical Cost
3,000,000/4,000,000 X1,000,000= P750,000
Tax Rates for Special Aliens and their Filipino Counterparts
. A married resident citizen has four (4) qualified dependent children. He has the following data on income and expenses for the year
2011:
Salary, Philippines, gross of withholding tax of P5,000
P 60,000
Gross business income, Philippines (gross sales, P1,200,000)
500,000
Business expenses, Philippines
180,000
Gross business income, USA (gross sales, P1,500,000)
900,000
Business expenses, USA
300,000
Interest income from bank deposit, Philippines
Interest income from bank deposit, USA
Interest income from domestic depository bank under EFCDS
Royalty on book published in the Philippines
Prize in a contest he joined in the Philippines
Philippine Charity Sweepstakes winnings
Gain from sale of shares of stock not traded through the local stock exchange
Dividend received from a domestic corporation
Tax payments, first three (3) quarters
Question 1 - How much is the taxable net income in the Philippines? P905,000
Resident citizen-Itemized
Item
Amount
Salary. Philippines
Less: BPE
APE
Taxable compensation income (A)
60,000
50,000
100,000
(90,000)
Gross business income, Philippines
Business expense Phil
Gross business income, USA
Business Expense, USA
Interest income bank deposit USA
Prize (Less than 10,000)
Total (B)
500,000
(180,000)
900,000
(300,000)
70,000
5,000
995,000
Taxable income (A+B)
905,000
2 - How much is the tax payable after deducting the allowable tax credits and payments?
905,000
-500,000 Tax is P125,000
405,000
X 32%
129,600
P 254,600 Income Tax Due
- 100,000 Tax Credits
- 5,000 Withholding tax on salary
P 149,600 Income tax payable
3 – How much is the total final tax on certain passive income?
Interest from peso bank deposit
50,000
Tax rate
20%
Final tax
10,000
Interest income from a depositary bank
Tax rate
Final tax
80,000
7.5%
6,000
Royalties on books
Tax rate
Final tax
100,000
10%
10,000
Dividend received from a domestic corp
Tax rate
Final tax
40,000
10%
4,000
Total final taxes on passive income
P 30,000
4 – How much is the capital gains tax?
Gain from sale of shares not traded thru local stock exchange
Capital gains tax using 5-10% table
P150,000
P10,000
50,000
70,000
80,000
100,000
5,000
1,000,000
150,000
40,000
100,000
A resident alien individual with three qualified dependent adopted children asked you to assist him in the preparation of his tax return for
his income in 2011. He provided you the following information:
Gross business income, Philippines (gross sales, P3,000,000)
P 1,000,000
Gross business income, Japan
(gross sales, P7,000,000)
5,000,000
Business expenses, Philippines
200,000
Business expenses, Japan
800,000
Philippine Charity Sweepstakes winnings
500,000
Japanese Sweepstakes winnings
400,000
Interest income, Bank of Tokyo, Japan
100,000
Interest income received from a depository bank under
Expanded Foreign Currency Deposit System (EFCDS), Philippines
300,000
Interest on peso bank deposit, Philippines
100,000
Quarterly income taxes paid
50,000
Question 1 - How much was the taxable net income?
Resident Alien -Itemized (Problem is silent in method of deduction)
Item
Amount
Gross business income -Philippines
1,000,000
Business expense -Phil
(200,000)
Net income
800,000
Less: BPE
50,000
APE
75,000
Net taxable income
P675,000
2 – How much was the tax due after deducting the quarterly tax payments?
Net taxable income
P675,000
- 500,000 Tax is P125,000
175,000
X 32% Tax is 56,000
P181,000 Income tax due
-100,000 Quarterly payments
81,000 tax due after quarterly payments(Tax payable)
3 – How much was the final tax on passive income?
Interest income received from a depository bank under EFCDS
Tax rate
Final tax
P300,000
X 7.5%
P 22,500
Interest on peso bank deposit, Philippines
Tax rate
Final tax
100,000
20%
P20,000
Total final taxes
P42,500
4 – How much was the taxable net income using optional standard deduction?