lOMoARcPSD|17839123 TAX7 - one possible ACCOUNTANCY (Our Lady of Fatima University) Studocu is not sponsored or endorsed by any college or university Downloaded by ALLYZA MAYE SILOS (20191750@spsps.edu.ph) lOMoARcPSD|17839123 Income Taxation – CBTAX01 CHAPTER 7 – ACTIVITY / ASSIGNMENT Solve the following problems. Show your solutions. 5 points each. On January 1, 2018, Mr. Ranier leased his vacant lot for a period of 12 years to Mr. Evan at an annual rate of P2,400,000. It was also agreed that Mr. Evan will pay the following: ⮚ P4,800,000 representing rental payment for the year 2018 and 2019 ⮚ Security deposit of P2,400,000 ⮚ Annual real property tax of P30,000 The lease contract provides, among others that the lessee will construct a 5storey building for parking purposes at a cost of P10,000,000. Ownership of the building shall belong to the lessor upon the expiration or termination of the lease contract. The building was completed on July 1, 2020 with an estimated useful life of 15 years. 1. How much can Mr. Ranier claim as deduction in relation to the lease in 2020? ANSWER: P 2,956,315.79 Depreciation for leasehold improvement [(10,000,000/(12years-2.5years)]*6/12 P 526,315.79 Annual Rent 2,400,000.00 Annual Real Property Tax Deductions in relation to the lease in 2020 30,000.00 P 2,956,315.79 2. Using the same information above, how much can Mr. Rainier claim as deduction in relation to the lease in 2021? ANSWER: P 2,430,000 Annual Rent P 2,400,000 Annual Real Property Tax Deduction in relation to the lease in 2021 30,000 P 2,430,000 Downloaded by ALLYZA MAYE SILOS (20191750@spsps.edu.ph)
