LYCEUM OF THE PHILIPPINES UNIVERSITY

Manila

Department of Accountancy and Management Accounting

Income Taxation
E-LEARNING PRACTICE SET 3

COMPUTATION

PROBLEM 1
A taxpayer received the following income in year 2019:
- Rental income, Philippine PHP 10,000
- Rental income, China 20,000
- Interest from peso deposit account 10,000
- Interest from US dollar deposit account 40,000
- Interest from Singapore dollar deposit account 5,000
- Prize from local rap battle 8,000
- Washing machine won in a barangay raffle 15,000
- Prize won in Jakarta, Indonesia 30,000
- Lotto winnings in Japan 10,000
- Dividend received from domestic company 60,000
Required:
1. Determine the income to be taxed using section 24 A of the tax code, if the taxpayer is a:
a. RC
b. NRC
c. RA
d. NRA-ETB
e. NRA-NETB
2. Determine the total income that is/are subject to final withholding tax, if the taxpayer is a:
a. RC
b. NRC
c. RA
d. NRA-ETB
e. NRA-NETB
3. Determine the final withholding taxes paid by the withholding agent if the taxpayer is a:
a. RC
b. NRC
c. RA
d. NRA-ETB
e. NRA-NETB

PROBLEM 2
Ms. Apple sold her vacant lot held as capital asset for P2,000,000. The zonal value of the property is P1,900,000 while the
fair market in the tax declaration amounts to P1,820,000. The said lot was purchased for P1,000,000.
4. What is the tax base that should be used in computing for the capital gains tax?
5. How much is the capital gains tax payable?
6. If Apple sold her vacant lot in favor of the government or any of its political subdivisions or agencies or to the
government owned or controlled corporations, what are the two available tax options for Apple?

PROBLEM 3
Mr. Totoy, a resident citizen, had the following data in 2018:
- Income from profession PHP 450,000
- Interest received on bank deposit (net of final tax) 4,000
- Interest income from bank under expanded FCDS. 10,000
- Winnings in raffle contest 100,000
 - Prize won in a local spelling bee 5,000
- Winnings abroad 300,000
- Dividend received from a domestic corporation 6,000
- Business income 40,000
- Business expenses 20,000
In addition, Totoy has a residential lot located in Cavite with a fair market value of P5,000,000, and a vacant lot in Cebu
with a fair market value of P1,000,000 and a zonal value of P1,200,000.
Compute for the following:
7. Taxable regular income.
8. Income tax due using graduated income tax rates.
9. Final withholding taxes on passive income.
10. Capital gains tax.
11. Assuming that the taxpayer is an OFW, how much is the total final tax withheld by the payor?
12. Assuming that the taxpayer is a NRA-NETB, how much is the total final tax withheld by the payor?

PROBLEM 4
Hendrix Matipuno, a resident citizen, joined an amateur beauty pageant “Super Sireyna”, won the 1st place award and
received a cash prize amounting to P100,000. Also during the taxable year, royalty income earned and received from his
book amounting to P20,000.
13. How much is his total passive income earned for the taxable year?
14. How much is the final withholding tax withheld by the payor?

PROBLEM 5
Vicky Co, Chinese, residing in Beijing, China had the following data in the Philippines during the year:
Cash dividend from domestic corporation PHP 60,000
Interest on dollar deposit with Metrobank 20,000
Also, during the year, her condominium unit in Baguio City which has a market value of P1,500,000 was sold for
P2,000,000.
15. How much is her final tax from passive income?
16. How much is the capital gains tax?

PROBLEM 6
Esperanza, a resident citizen, sold the following shares of stock of domestic corporations in for the year 2018:

Company In Local Stock Exchange Selling Price Cost Date of Sale

GMA Corporation Listed and Traded 200,000 100,000 February 5
ABS Corporation Listed and Traded 500,000 700,000 March 16
ABC Corporation Not Traded 500,000 120,000 August 1
EPS Corporation Not Traded 200,000 250,000 October 1
17. How much is the tax for transaction/s who fall/s under Section 127 of the tax code?
18. How much is the net capital gain or loss from sale of shares of stock discussed under Section 24 C of the tax
code?
19. Assuming Mr. Lloyd, an individual resident citizen, is the buyer of shares of stocks from ABC and EPS
Corporation, compute for the final withholding tax due for the year under BIR Form 1707-A.

PROBLEM 7
The residential house and lot owned by Ms. Orange located in Naic, Cavite was purchased in 2015 for P2,000,000. On
February 5, 2018, it was sold for P8,000,000. The zonal value of the property at the time of sale was P9,000,000. The
proceeds from the sale of the old property was used to acquire a new residential property worth P12,000,000.
20. How much is the adjusted cost basis of new principal residence?
21. How much is the capital gains tax from the sale of residential property?
22. Assuming that the new principal residence’s cost is estimated to be P5,000,000, how much is the capital gains tax
payable?
23. Assuming that the new principal residence’s cost is estimated to be P5,000,000, how much is the cost basis, for
tax purposes, of the new residence?
PROBLEM 8
Mr. John and Mr. Jason agreed to swap their respective principal residences, with both parties intended to use their newly
acquired properties as their principal residence.

Mr. John’s house and lot is located in Pasay City, with a fair market value of P5,000,000. It was purchased years ago for
P2,000,000.

Mr. Jason’s house and lot, located in Las Pinas City, has a fair market value of P6,000,000 and cost of P1,000,000. In
addition, Mr. Jason shall also receive an additional cash of P2,000,000 from Mr. John as part of this agreement.
24. Compute for the capital gains tax payable of Mr. John.
25. Compute for the capital gains tax payable of Mr. Jason.
26. What is the adjusted cost of the new residence of Mr. John?
27. What is the adjusted cost of the new residence of Mr. Jason?
28. Assuming that Mr. Jason’s property is a condominium unit held as “ordinary asset”, what section/s in the tax code
should Mr. Jason use in computing for his tax liability in relation to this transaction?

PROBLEM 9
Ms. Mansanas, a resident citizen, bought a long term investment with a maturity of 25 years. After holding the said
investment for 3 years, she sold it to Mr. Saging, also a resident citizen. Interest earned by Ms. Mansanas was P20,000
from the pre termination of her investment.

Mr. Saging, meanwhile, after holding the investment for 6 years, sold it to Ms. Ponkan, a resident alien. His interest from
the investment of 6 years is P100,000.

After 4 years, Ms. Ponkan sold the same investment that she bough from Mr. Saging to Mr. Persimon, a NRA-NETB. Ms.
Ponkan received interest of P50,000.

Mr. Persimon held the investment until maturity and received interest of P200,000.

29. How much is the final tax withheld from the interest earned by Ms. Mansanas?
30. How much is the final tax withheld from the interest earned by Mr. Saging?
31. How much is the net cash received by Ms. Ponkan from the interest of her investment?
32. How much is the final tax withheld from Mr. Persimon from the transaction?

PROBLEM 10
A resident citizen received the following income for the year 2018:
Dividends from foreign corporation, located abroad PHP 10,000
Royalties from musical composition 50,000
Sold a vacant lot held as capital asset:
Selling Price 5,000,000
Fair Value 4,800,000
Zonal Value 5,500,000
Interest income from a depositary bank under expanded FCDS 20,000
Prize from a local contest 5,000
Interest income from BDO savings account 7,000

Required:
33. Compute for the total cash received from his passive income.
34. How much is the income to be included in his income tax return?
35. Indicate the proper BIR form and the amount of tax to be paid for the sale of vacant lot.