TRANSFER AND BUSINESS TAXATION BY WIN LU BALLADA 2014
Chapter 2 True or False 1. T 2. T 3. T 4. F 5. T
6. 7. 8. 9. 10.
F F T F T
Multiple Choice 1. D 2. A, B, D 3. C 4. C 5. B
6. 7. 8. 9. 10.
A D B C A
11. 12. 13. 14. 15.
F F F T T
Multiple Choice 1. C 2. A 3. D 4. C 5. B
True or False 1. F 2. T 3. T 4. T 5. T
6. 7. 8. 9. 10.
6. 7. 8. 9. 10.
Multiple Choice 1. B 2. B 3. D 4. C 5. B
A B D B B
T F T F T 6. 7. 8. 9. 10.
A D B B C
Chapter 3 True or False 1. T 2. T 3. T 4. T 5. F
6. 7. 8. 9. 10.
Identification Classification 1. A 2. A 3. C 4. A 5. A
of Property 6. B 7. B 8. C 9. B 10. B
Identification Kind of Transfer 1. A 2. B 3. B 4. D 5. C
True or False 1. F 2. T 3. T 4. T 5. T
F T T T T
6. 7. 8. 9. 10.
A C D A C
11. 12. 13. 14. 15.
C C C C C
6. 7. 8. 9. 10.
16. 17. 18. 19. 20. 21. 22. 23.
Problem Adequacy of A. 0 B. P750,000 C. P1.25M
T T T T F
B C A C C C B A
Multiple Choice 1. A 2. C 3. D 4. B 5. D
6. 7. 8. 9. 10.
Identification Classification 1. A 2. A 3. C 4. C 5. A
of Property 6. C 7. A 8. C 9. B 10. B
B D A C A
Multiple Choice 1. C 2. D 3. A 4. B 5. C
11. 12. 13. 14. 15.
C C C C C
6. 7. 8. 9. 10.
B B A C D
16. 17. 18. 19. 20. 21.
B C A C C A
Consideration A. P900,000 B. P400,000 C. 0
Essay 1. Proceeds shall form part of the gross estate because the beneficiary is the estate. This is regardless of whether the designation is revocable o r irrevocable. 2. Proceeds shall form part of the gross estate because the beneficiary is the administrator of the estate. This is regardless of whethe r the designation is revocable or irrevocable. 3. Proceeds shall form part of the gross estate. Since the designation of the beneficiary is silent as to its revocability, it is presumed by law to b e revocable. 4. Proceeds shall form part of the gross estate because the designation of the beneficiary is revocable. 5. Proceeds shall not form part of the gross estate because the designation of the beneficiary is irrevocable. Problem Claims 1. A 2. B 3. D 4. A 5. B 6. D *
Valuation 1. P3M 2. P1.4M 3. P272,000 4. P80,000 5. P550,000*
Situs of Property 1. within 2. within 3. within 4. within 5. without
Paid-in capital (P4 x 800,000 shs) Retained earnings Stockholders’ equity Divide by outstanding shares Book value per share Multiply by shares held Value to include in gross estate
6. 7. 8. 9. 10.
within without within without within
P3,200,000 1,200,000 P4,400,000 800,000 P 5.50 100,000 P 550,000
11. 12. 13. 14. 15.
without within within without without
16. 17. 18. 19. 20.
without within within within without
21. 22. 23. 24. 25.
within within within without without
26. 27. 28. 29.
within within without within
1
Problem a, b, and c. Gross estate = P31.2M (All items are added.) d. Gross estate = P10.025M (Consider items 4, 5, 7, 8, 9, 18, 19, 20 and 23.) e. Gross estate = P16.7M (Consider items 2, 4, 5, 7, 8, 9, 11, 14, 16, 17, 18, 19, 20, 21, 22 and 23.) Problem a, b, and c. Gross estate = P31.025M (All items are added.) d. Gross estate = P8.525M (Consider items 2, 3, 6, 7, 9, 10, 11, 19 and 21.) e. Gross estate = P18.725M (Consider items 2, 3, 6, 7, 8, 9, 10, 11, 13, 16, 18, 19, 20 and 21.) Problem a, b, and c. Gross estate = P26,987,500 (All items are added.) d. Gross estate = P7.65M (Consider items 3, 4, 5, 6, 8, 11 and 15.) e. Gross estate = P13.975M (Consider items 1, 3, 4, 5, 6, 8, 11, 13, 15, 16, 20, 21, 22, 23, 26, 28 and 29.)
Chapter 4 True or False 1. T 2. F 3. T 4. T 5. F
6. 7. 8. 9. 10.
T T F T T
Multiple Choice 1. 2. 3. 4. 5.
B B B D A
11. 12. 13. 14. 15.
True or False 1. T 2. T 3. F 4. F 5. T
F F T F F
Multiple Choice
6. D 1. A 6. 7. C 2. D 7. 8. A 3. A 8. 9. D 4. D 9. 10. D 5. D 10. * Embalming charges Burial apparel of the decedent Cost of coffin Mourning apparel during burial of the surviving spouse Mourning apparel one unmarried minor child Snacks and drinks during the wake Honoraria of priest for daily mass for three days; P500 a day Telecommunication charges to inform relatives in the provinces Charges for death notice published in a newspaper Cost of video footage of the burial and interment Funeral car service during interment Honorarium of priest who celebrated the mass during interment Cost of tombstone Total Actual funeral expenses (as computed) 5% x P1,800,000 Maximum limit Deduction allowed
A D B A C
T F T T F
Problem 2 Answer: P78,800*
1,500 1,000 1,500 1,500 200 700 2,100 400 700 50,000 P78,800
P 78,800 90,000 200,000 P78,800
Multiple Choice 1. A 2. B 3. C 4. C 5. B
6. 7. 8. 9. 10.
C C A B C
11. 12. 13. 14. 15.
D C D C D
16. 17. 18. 19. 20.
B A B B D
31. 32. 33. 34. 35.
36. 37. 38. 39. 40.
B C C C B
41. 42. 43. 44. 45.
B C B D C
46. 47. 48. 49. 50.
C C C A A
B A C A C
Funeral Expenses Problem 1 1. P50,000 2. P100,000 3. P175,000 4. P175,000 5. P200,000 P 2,000 2,200 15,000
6. 7. 8. 9. 10.
21. 22. 23. 24. 25.
A D C B B
26. 27. 28. 29. 30.
C D A D C
2
Problem 1
Problem 2
Real and personal properties
P3,500,000
Real and personal properties
P4,250,000
Family Home Gross Estate Less: Deductions Ordinary Deductions Funeral Expenses Other Deductions Special Deductions Family Home Standard Deduction Medical Expenses
1,750,000 P5,250,000
Family Home Gross Estate Less: Deductions Ordinary Deductions Funeral Expenses Other Deductions Special Deductions Family Home Standard Deduction Medical Expenses
1,500,000 P5,750,000
P 200,000 1,250,000 P1,000,000 1,000,000 350,000
Total Deductions Net Taxable Estate
P1,450,000
2,350,000 P3,800,000 P1,450,000
P
200,000 950,000
P1,000,000 1,000,000 500,000
Total Deductions Net Taxable Estate
Problem 3
P1,150,000
2,500,000 P3,650,000 P2,100,000
Problem 4
Real and personal properties
P3,750,000
Real and personal properties
P2,800,000
Family Home Gross Estate Less: Deductions Ordinary Deductions Funeral Expenses Other Deductions Special Deductions Family Home Standard Deduction Medical Expenses Total Deductions Net Taxable Estate
900,000 P4,650,000
Family Home Gross Estate Less: Deductions Ordinary Deductions Funeral Expenses Other Deductions Special Deductions Family Home Standard Deduction Medical Expenses Total Deductions Net Taxable Estate
750,000 P3,550,000
P 200,000 1,200,000 P 900,000 1,000,000 200,000
P1,400,000
2,100,000 P3,500,000 P1,150,000
Chapter 5 Problem 1. exempt 2. P2,500 3. P7,500 4. P12,500 5. P19,000
6. 7. 8. 9. 10.
P59,000 P99,000 P190,000 P410,000 P690,000
11. 12. 13. 14. 15.
P990,000 P1,315,000 P1,915,000 P4,215,000 P5,215,000
Chapter 6 Problem 1 Gross estate Parcel of land in California, U.S.A. House and lot in Quezon City (family home) Shares of stock in a foreign corporation with office in California, U.S.A. Car in California, U.S.A. Bank deposit Claim against an insolvent person Less: Deductions Funeral expenses Actual P312,500 5% x P6,375,000 318,750 Maximum limit 200,000 Allowed
P2,500,000 2,250,000 1,125,000 312,500 125,000 62,500
P6,375,000
P 200,000
3
P 177,500 1,050,000 P 750,000 1,000,000 400,000
P1,227,500
2,150,000 P3,377,500 P 172,500
Medical expenses (maximum limit) Judicial expenses Claims against the estate Claims against an insolvent person Family home Standard deduction Net taxable estate
500,000 43,750 90,625 62,500 1,000,000 1,000,000
2,896,875 P3,478,125
Estate tax On
P2,000,000 1,478,125 x 11% P3,478,125
P135,000.00 162,593.75 P297,594.00
Problem 2 Gross estate Fishpond in General Santos City Lot in Las Pinas City House and lot in San Juan, Metro Manila (family home) Honda car Farm in Nueva Ecija donated mortis causa to sister Time deposit Less: Deductions Mortgage on fishpond Medical expenses incurred in 2012 th Unpaid real estate tax for the 4 quarter of 2012 Family home Standard deduction Net taxable estate
P2,500,000 625,000 593,750 375,000 262,500 150,000 P
P4,506,250
25,000 287,500
20,000 593,750 1,000,000
1,926,250 P2,580,000
Estate tax On
P2,000,000 580,000 x 11% P2,580,000
P135,000 63,800 P198,800
Problem 3 Gross estate Farm, Camarines Sur Bank deposit House and lot in Guadalupe, Makati City (family home) Investment in a domestic partnership Less: Deductions Funeral expenses Actual P293,750 5% x P9,875,000 493,750 Maximum limit 200,000 Allowed Medical expenses Standard deduction Family home Net taxable estate
P4,375,000 2,125,000 1,875,000 1,500,000
200,000 237,500 1,000,000 1,000,000
P
Estate tax On
P5,000,000 2,437,500 x 15% P7,437,500
P9,875,000
P465,000 365,625 P830,625
4
2,437,500 P7,437,500
Problem 4 1. Gross estate Cash in bank, Makati City Investment in a domestic partnership Car Foreign shares Domestic shares Accounts receivable Less: Deductions Funeral expenses Actual P150,000 5% x P4,200,000 210,000 Maximum limit 200,000 Allowed Judicial expenses Claim against an insolvent person Loss by robbery 3 months after death Unpaid income tax for 2011 Legacy in favor of Philippine National Red Cross Legacy to City of Makati Standard deduction Net taxable estate
P1,200,000 1,000,000 700,000 700,000 500,000 100,000
P4,200,000
P150,000 100,000 100,000 200,000 160,000 50,000 100,000 1,000,000
1,860,000 P2,340,000
Estate tax On
P2,000,000 340,000 x 11% P2,340,000
P135,000 37,400 P172,400
2. Gross estate Cash in bank, Makati City Investment in a domestic partnership Car Domestic shares Less: Deductions Funeral expenses Actual P150,000 5% x P3,400,000 170,000 Maximum limit 200,000 Allowed Judicial expenses Loss by robbery 3 months after death Unpaid income tax for 2011 P3,400,000 P4,200,000
P1,200,000 1,000,000 700,000 500,000
P150,000 100,000 200,000 160,000 P610,000
x P610,000
P493,809.52
Legacy in favor of Philippine National Red Cross Legacy to City of Makati Net taxable estate
50,000.00 100,000.00
Estate tax On
P2,000,000.00 756,190.48 x 11% P2,756,190.48
P3,400,000.00
P135,000.00 83,180.95 P218,181.00
5
643,809.52 P2,756,190.48
3. Gross estate-Car Less: Deductions Funeral expenses Actual P150,000 5% x P700,000 35,000 Maximum limit 200,000 Allowed Judicial expenses Loss by robbery 3 months after death Unpaid income tax for 2011 P 700,000 P4,200,000
P700,000
P 35,000 100,000 200,000 160,000 P495,000
x P495,000
P 82,500
Legacy in favor of Philippine National Red Cross Legacy to City of Makati Net taxable estate
50,000 100,000
232,500 P467,500
Estate tax On
P200,000 267,500 x 5% P467,500
Exempt P13,375
Chapter 7 True or False 1. T 6. 2. F 7. 3. T 8. 4. T 9. 5. F 10.
Multiple Choice 1. B 2. A 3. A 4. D 5. C
T T F F F
6. 7. 8. 9. 10.
D B D C C
Problem 1 Exclusive Conjugal Properties: Apartment, 3 units Bank deposit Domestic shares Car Exclusive Properties: Family home Vacant lot Gross Estate (Less): Conjugal Deductions Funeral expenses Unpaid mortgage on apartment Note payable Exclusive Deductions Legacy to Hospicio de San Jose Net Estate After Deductions (Less): Share of surviving spouse Family home Standard deduction Net Taxable Estate
1,250,000 300,000 1,550,000
(20,000) 1,530,000
Conjugal
Total
1,000,000 700,000 500,000 400,000
2,600,000
2,600,000
1,550,000 4,150,000
(90,000) (300,000) (60,000)
(90,000) (300,000) (60,000)
2,150,000
(20,000) 3,680,000
(1,075,000) (1,000,000) (1,000,000) 75,000
530,000
(1,075,000) (1,000,000) (1,000,000) 605,000
Estate Tax Due On
500,000 105,000 605,000 6
at
8%
15,000 8,400 23,400
Problem 2 Exclusive Conjugal Properties: Family home Tobacco plantation Bank deposit, PDCP Personal property Notes receivable Exclusive Properties: Family vacation house, Tagaytay Family lot Gross Estate (Less): Conjugal Deductions Funeral expenses Unpaid mortgage on plantation Net Estate After Deductions (Less): Share of surviving spouse Family home Standard deduction Net Taxable Estate
Conjugal
Total
1,350,000 2,000,000 650,000 300,000 200,000
4,500,000
800,000 500,000 1,300,000
4,500,000
1,300,000 5,800,000
1,300,000
(80,000) (200,000) 4,220,000
(80,000) (200,000) 5,520,000
(2,110,000) (675,000) (1,000,000) 435,000
(2,110,000) (1,000,000) (1,000,000) 1,410,000
(325,000) 975,000
Estate Tax Due On
500,000 910,000 1,410,000
at
15,000 72,800 87,800
8%
Problem 3-1 Exclusive Conjugal Properties: Personal property Apartment and lot Exclusive Properties: Land Jeep San Miguel shares Gross Estate (Less): Conjugal Deductions Funeral expenses Unpaid mortgage on apartment & lot Exclusive Deductions Vanishing deduction (Sch.) Net Estate After Deductions (Less): Share of surviving spouse Standard deduction Net Taxable Estate
Conjugal
Total
1,300,000 1,000,000
2,300,000
2,300,000
420,000 2,720,000
(50,000) (70,000)
(50,000) (70,000)
(30,588) 389,412
2,180,000
(30,588) 2,569,412
389,412
(1,090,000) (1,000,000) 90,000
(1,090,000) (1,000,000) 479,412
100,000 20,000 300,000 420,000
Schedule of Vanishing Deduction Value taken Land Jeep Less: Mortgage paid Initial basis
50,000 20,000
Less:
40,000 2,720,000
x *
120,000
70,000 30,000 40,000 **
1,765
7
Final Basis
38,235
Multiply by rate Vanishing deduction
80% 30,588
* Gross estate ** Funeral expenses, Unpaid mortgage, apartment & lot Problem 3-2 Exclusive 420,000
Gross Estate (Less): Conjugal Deductions Funeral expenses Unpaid mortgage on apartment & lot Exclusive Deductions Unpaid mortgage on land Vanishing deduction (Sch.) Net Estate After Deductions (Less): Share of surviving spouse Standard deduction Net Taxable Estate
Conjugal 2,300,000
Total 2,720,000
(50,000) (70,000)
(50,000) (70,000)
(10,000) (38,088) 371,912
2,180,000
(10,000) (38,088) 2,551,912
371,912
(1,090,000) (1,000,000) 90,000
(1,090,000) (1,000,000) 461,912
Schedule of Vanishing Deduction Value taken Land Jeep Less: Mortgage paid Initial basis Less:
50,000 20,000
50,000 2,720,000
x *
130,000
Final Basis Multiply by rate Vanishing deduction
**
70,000 20,000 50,000 2,390 47,610 80% 38,088
* Gross estate ** Funeral expenses; Unpaid mortgage, apartment & lot, land Problem 4 Exclusive Conjugal Properties: House and lot (Family Home) Apartment Personal property Exclusive Properties: Fishpond Gross Estate (Less): Conjugal Deductions Funeral expenses Unpaid mortgage on apartment & lot Claims against the estate Exclusive Deductions Unpaid mortgage on land Vanishing deduction (Sch.) Net Estate After Deductions (Less): Share of surviving spouse Family home Standard deduction Net Taxable Estate
Total
1,500,000 3,000,000 400,000
4,900,000
4,900,000
500,000 5,400,000
(120,000) (500,000) (80,000)
(120,000) (500,000) (80,000)
(20,000) (52,000) 428,000
4,200,000
(20,000) (52,000) 4,628,000
428,000
(2,100,000) (750,000) (1,000,000) 350,000
(2,100,000) (750,000) (1,000,000) 778,000
500,000 500,000
8
Estate Tax Due
Conjugal
On
500,000 278,000 778,000
at
15,000 22,240 37,240
8%
Schedule of Vanishing Deduction: Value taken, Fishpond Less: Mortgage paid Initial basis
140,000 40,000 100,000
Less:
100,000 5,400,000
x *
720,000
Final Basis Multiply by rate Vanishing deduction
**
13,333 86,667 60% 52,000
* Gross estate ** Funeral expenses; Unpaid mortgage-apartment, fishpond; Claims against the estate Problem 5 Conjugal Gross Estate House and lot (Family Home) Fishpond, Dagupan Domestic shares of stock Investment in a business partnership Time deposit (Less): Conjugal Deductions Funeral expenses Unpaid mortgage on fishpond Medical expenses Net Estate After Deductions (Less): Share of surviving spouse Family home Standard deduction Net Taxable Estate
1,500,000 1,200,000 300,000 250,000 1,600,000 (192,500) (350,000) (500,000)
(1,903,750) (750,000) (1,000,000)
4,850,000
(1,042,500) 3,807,500
(3,653,750) 153,750
Estate Tax Due On
153,750
Exempt
Problem 6 Exclusive Conjugal Properties: House and lot (Family Home) Azucarera, Tarlac Investment in a domestic partnership Personal property Cash in bank Exclusive Properties: Apartment, QC Gross Estate (Less): Conjugal Deductions Funeral expenses Unpaid mortgage, azucarera Income tax for 2011 Medical expenses for 2012 Exclusive Deductions Mortgage on apartment
700,000 700,000
Conjugal
Total
1,350,000 1,800,000 400,000 160,000 200,000
3,910,000
3,910,000
700,000 4,610,000
(130,000) (140,000) (24,000) (75,000)
(130,000) (140,000) (24,000) (75,000)
(100,000)
(100,000)
9
Net Estate After Deductions (Less): Share of surviving spouse
600,000
3,541,000
4,141,000
(1,770,500)
(1,770,500)
Family home Standard deduction Net Taxable Estate
(675,000) (1,000,000) 95,500
600,000
(675,000) (1,000,000) 695,500
Estate Tax Due On
500,000 195,500 695,500
at
15,000 15,640 30,640
8%
Problem 7 Exclusive Conjugal Properties: Real Properties Exclusive Properties: Family Home Other Exclusive Properties Gross Estate Less: Ordinary Deductions Conjugal Deductions Funeral expenses Other Deductions Total Conjugal Deductions Net Conjugal Estate Special Deductions Family Home Standard Deduction Medical Expenses Total Deductions Net Estate Less: 1/2 Share of Surviving Spouse Conjugal Property Conjugal Deduction Net Conjugal Estate (P2,700,000/2) Net Taxable Estate
1,750,000 2,800,000 4,550,000
Conjugal
Total
4,500,000
4,500,000
4,500,000
4,550,000 9,050,000
(200,000) (1,600,000) (1,800,000) 2,700,000
(200,000) (1,600,000) (1,800,000)
(1,000,000) (1,000,000) (500,000) (4,300,000) 4,750,000 4,500,000 (1,800,000) 2,700,000 (1,350,000) 3,400,000
Notes: 1. FH is the exclusive property of the decedent, hence, it does not form part of the conjugal gross estate. 2. The estate is allowed to claim the maximum P1 million FH deduction under 'special deductions.'
10
Problem 8 Exclusive Conjugal Properties: Family Home
Conjugal 2,500,000
Total
Other Real Properties Exclusive Properties: Gross Estate Less: Ordinary Deductions Conjugal Deductions Funeral expenses Other Deductions Total Conjugal Deductions Net Conjugal Estate Special Deductions Family Home Standard Deduction Medical Expenses Total Deductions Net Estate Less: 1/2 Share of Surviving Spouse Conjugal Property Conjugal Deduction Net Conjugal Estate (P4,400,000/2) Net Taxable Estate
3,800,000 2,200,000 2,200,000
6,300,000
(200,000) (1,700,000) (1,900,000) 4,400,000
6,300,000 2,200,000 8,500,000
(200,000) (1,700,000) (1,900,000)
(1,000,000) (1,000,000) (480,000) (4,380,000) 4,120,000 6,300,000 (1,900,000) 4,400,000 (2,200,000) 1,920,000
Problem 9 Exclusive Conjugal Properties: Family Home Other Real Properties Exclusive Properties: Gross Estate Less: Ordinary Deductions Conjugal Deductions Funeral expenses Other Deductions Total Conjugal Deductions Net Conjugal Estate Special Deductions Family Home Standard Deduction Medical Expenses Total Deductions Net Estate Less: 1/2 Share of Surviving Spouse Conjugal Property Conjugal Deduction Net Conjugal Estate (P6,100,000/2) Net Taxable Estate
Conjugal 1,700,000 7,000,000
2,500,000 2,500,000
8,700,000
(200,000) (2,400,000) (2,600,000) 6,100,000
Total
8,700,000 2,500,000 11,200,000
(200,000) (2,400,000) (2,600,000)
(850,000) (1,000,000) (500,000) (4,950,000) 6,250,000 8,700,000 (2,600,000) 6,100,000 (3,050,000) 3,200,000
11
Problem 10 Exclusive Conjugal Properties: Other Real Properties Family Home
Conjugal
Total
3,300,000 1,100,000
4,400,000
Exclusive Properties: Other Real Properties Family Lot Gross Estate Less: Ordinary Deductions Conjugal Deductions Funeral expenses Other Deductions Total Conjugal Deductions Net Conjugal Estate Special Deductions Family Home Exclusive Lot Conjugal Home (P1,100,000/2) Standard Deduction Medical Expenses Total Deductions Net Estate Less: 1/2 Share of Surviving Spouse Conjugal Property Conjugal Deduction Net Conjugal Estate (P2,750,000/2) Net Taxable Estate
2,200,000 450,000 2,650,000
4,400,000
(150,000) (1,500,000) (1,650,000) 2,750,000
2,650,000 7,050,000
(150,000) (1,500,000) (1,650,000)
450,000 550,000
(1,000,000) (1,000,000) (450,000) (4,100,000) 2,950,000
4,400,000 (1,650,000) 2,750,000 (1,375,000) 1,575,000
Chapter 8 True or False 1. T 6. T 2. T 7. T 3. T 8. T 4. T 9. T 5. T 10. F Problem 1
Exclusive Communal Properties: Lot w/ apartment, QC Lot w/ apartment, Makati Exclusive Properties: Farm, Nueva Ecija Gross Estate (Less): Communal Deductions Funeral expenses Judicial expenses Accounst payable Fire loss Exclusive Deductions Unpaid mortgage on farm Legacy to Makati City Net Estate After Deductions
Communal
Total
1,800,000 1,200,000
3,000,000
3,000,000
600,000 3,600,000
(100,000) (200,000) (70,000) (30,000)
(100,000) (200,000) (70,000) (30,000)
(150,000) (100,000) 350,000
2,600,000
(150,000) (100,000) 2,950,000
350,000
(1,300,000) (1,000,000) 300,000
(1,300,000) (1,000,000) 650,000
600,000 600,000
12
(Less): Share of surviving spouse Standard deduction Net Taxable Estate Estate Tax Due On
500,000
15,000
150,000 650,000
at
8%
12,000 27,000
Communal
Total
1,300,000 2,000,000 1,000,000 700,000
5,000,000
5,000,000
200,000 5,200,000
(80,000) (300,000) (20,000)
(80,000) (300,000) (20,000)
(50,000) 150,000
4,600,000
(50,000) 4,750,000
150,000
(2,300,000) (650,000) (1,000,000) 650,000
(2,300,000) (650,000) (1,000,000) 800,000
Problem 2 Exclusive Communal Properties: Family home Investment in a business partnership Fishpond Personal property Exclusive Properties: Ranch Gross Estate (Less): Communal Deductions Funeral expenses Unpaid mortgage on fishpond Unpaid real property taxes Exclusive Deductions Unpaid mortgage on ranch Net Estate After Deductions (Less): Share of surviving spouse Family home Standard deduction Net Taxable Estate
200,000 200,000
Estate Tax Due On
500,000 300,000 800,000
8%
15,000 24,000 39,000
Communal
Total
3,000,000 1,200,000 300,000
4,500,000
4,500,000
1,120,000 5,620,000
(50,000) (100,000) (70,000) (150,000)
(50,000) (100,000) (70,000) (150,000)
(20,000) 1,100,000
4,130,000
(20,000) 5,230,000
1,100,000
(2,065,000) (1,000,000) (1,000,000) 65,000
(2,065,000) (1,000,000) (1,000,000) 1,165,000
at
Problem 3 Exclusive Communal Properties: Family home Inherited from father Owned by Mrs. Llovido before marriage Exclusive Properties: Received as gift from mother Income from gift from mother Gross Estate (Less): Communal Deductions Funeral expenses Judicial expenses Medical expenses Obligations during marriage Exclusive Deductions Indebtedness before marriage Net Estate After Deductions (Less): Share of surviving spouse Family home Standard deduction Net Taxable Estate
1,115,000 5,000 1,120,000
13
Estate Tax Due On
500,000 665,000 1,165,000
at
8%
15,000 53,200 68,200
Problem 4 Exclusive Communal Properties:
Communal
Total
Family home acquired during marriage Owned by Mr. Castaneda before marriage Owned by Mrs. Castaneda before marriage Exclusive Properties: Inheritance Gross Estate (Less): Communal Deductions Funeral expenses Judicial expenses Unpaid obligations Exclusive Deductions Unpaid mortgage on property inherited Vanishing deduction (Sch.) Net Estate After Deductions (Less): Share of surviving spouse Family home Standard deduction Net Taxable Estate
4,000,000 300,000 200,000
4,500,000
4,500,000
2,000,000 6,500,000
(200,000) (80,000) (35,000)
(200,000) (80,000) (35,000)
(200,000) (736,615) 1,063,385
4,185,000
(200,000) (736,615) 5,248,385
1,063,385
(2,092,500) (1,000,000) (1,000,000) 92,500
(2,092,500) (1,000,000) (1,000,000) 1,155,885
2,000,000 2,000,000
Estate Tax Due On
500,000 655,885 1,155,885
Schedule of Vanishing Deduction: Value taken, Property inherited Less: Mortgage paid Initial basis Less:
1,000,000 6,500,000
at
x *
15,000 52,471 67,471
8%
515,000
**
Final Basis Multiply by rate Vanishing deduction * Gross estate ** Funeral expenses, Judicial expenses, Unpaid obligations, Unpaid mortgage on property inherited
14
Chapter 9 Multiple Choice 1. C 2. C 3. B 4. D 5. A
6. 7. 8. 9. 10.
D C B A D
11. 12. 13. 14.
A D C C
1,100,000 100,000 1,000,000 79,231 920,769 80% 736,615
Problem 1 a. Philippine estate tax: On P2,000,000
P135,000
Allowable tax credit: Limitation 1 USA (P600,000/P2M x P135,000) Actual Allowed
P 40,500 250,000 P40,500
Singapore (P400,000/P2M x P135,000) Actual Allowed Total (Limitation 1)
P 27,000 120,000
Limitation 2 (P1M/P2M x P135,000) Actual (P250,000 + P120,000) Allowed
P 67,500 370,000
27,000 P67,500
P67,500
Tax credit to be deducted (either limitation)
P67,500
b. Philippine estate tax still due: Philippine estate tax Less: Tax credit Estate tax still due
P135,000 67,500 P 67,500
Problem 2 1a. Philippine estate tax: On P
500,000 700,000 x 8% P1,200,000
P15,000 56,000 P71,000
b. Allowable tax credit: Limitation 1 Indonesia (P400,000M/1.2M x P71,000) Actual Allowed
P23,666.67 10,000.00 P10,000
Vietnam (P200,000/P1.2M x P71,000) Actual Allowed Total (Limitation 1)
P11,833.33 2,000.00
Limitation 2 (P600,000/P1.2M x P71,000) Actual (P10,000 + P2,000) Allowed
P35,500.00 12,000.00
2,000 P12,000
P12,000 15
Tax credit to be deducted (either limitation)
P12,000
c. Philippine estate tax still due: Philippine estate tax ( computed in “a”) Less: Tax credit (computed in “b”) Estate tax still due
P71,000 12,000 P59,000
2a & c. On P500,000
P15,000
100,000 x 8% P600,000
8,000 P23,000
b. No allowable tax credit.
Chapter 10 True or False 1. F 2. T 3. T 4. T 5. F
6. 7. 8. 9. 10.
T T F T T
Multiple Choice 1. B 2. C 3. A 4. B 5. C
6. 7. 8. 9. 10.
T T T T T
Multiple Choice 1. C 2. A 3. B 4. D 5. B
6. 7. 8. 9. 10.
F T T F T
6. 7. 8. 9. 10.
A, B D B B D
Chapter 11 True or False 1. F 2. T 3. F 4. T 5. T
6. D 7. D 8. B
Chapter 12 True or False 1. F 2. T 3. T 4. T 5. T
Multiple Choice 1. C 2. B 3. C 4. D 5. A 6. B
Chapter 13 Multiple Choice: 1. C 2. C 3. B 4. B 5. D
Problems 6. D 7. A 8. A 9. D 10. A
11. 12. 13. 14. 15.
D B D A C
16. 17. 18. 19. 20. 21.
B B D A B B
Problems 6. C 7. B 8. C 9. D 10. A
11. 12. 13. 14. 15.
C A D B A
16. 17. 18. 19. 20.
C D B A C
Chapter 14 Multiple Choice: 1. D 2. D 3. D 4. B 5. P90,000
21. D
16
For nos. 6-21, please see computation below. Mrs. Herrera 1. Donor’s tax to be based on the table for donations to non-strangers. Gross gift, June 13, To Lance Less: Exemption Net gift Add: Prior net gift Gross gift, Jan. 25, To Leonard Less: Exemption Aggregate net gift
P700,000 300,000 P400,000 P400,000 10,000
390,000 P790,000
Multiple Choice 1. C 2. A 3. C 4. A 5. A
6. 7. 8. 9. 10. 11.
C A C B C D
Donor’s tax, total net gift On P500,000 P14,000 290,000 x 6% 17,400 P790,000 Less: Tax on prior net gift On P200,000 P2,000 190,000 x 4% 7,600 P390,000 Donor’s tax still due 2.
P31,400
9,600 P21,800
30% Donor’s tax for donations to strangers. Gross gift, Dec. 25, To Patty Less: Exemption Net gift Add: Prior net gift Gross gift, Jan. 25, To Pam Less: Exemption Net gift Gross gift, Apr. 8, To IBP Less: Exemption Net gift Gross gift, May. 13, To Cavite Prov. Less: Exemption Net gift
P430,000 30,000 P400,000 P400,000 0 P400,000 P400,000 400,000 0 P2,000,000 2,000,000 0
Total net gift Multiply by: Donor’s tax on total net gift Less: Donor’s tax on all prior net gift (Jan. 25, P400,000 x 30%) Donor’s tax due
400,000 P800,000 30% P240,000 120,000 P 120,000
Mr. Herrera 1. Donor’s tax to be based on the table for donations to non-strangers. Gross gift, Dec. 25, To Patty Less: Exemption Net gift Add: Prior net gift Gross gift, Jan. 25, To Leonard Less: Exemption Aggregate net gift Donor’s tax, total net gift On P500,000 P14,000 290,000 x 6% 17,400 P790,000
P430,000 30,000 P400,000 P400,000 10,000
390,000 P790,000
P31,400
Less: Tax on prior net gift On P200,000 P2,000 190,000 x 4% 7,600 P390,000 Donor’s tax still due
9,600 P21,800 17
2.
30% Donor’s tax for donations to strangers. Gross gift, June 13, To Lance Less: Exemption Net gift Add: Prior net gift
P700,000 300,000 P400,000
Gross gift, Jan. 25, To Pam Less: Exemption Net gift
P400,000 0
Gross gift, Apr. 8, To IBP
P400,000
P400,000
Less: Exemption Net gift
Gross gift, May. 13, To Cavite Prov. Less: Exemption Net gift
400,000 0
P2,000,000 2,000,000 0
Total net gift Multiply by: Donor’s tax on total net gift Less: Donor’s tax on all prior net gift (Dec. 25, P400,000 x 30%) Donor’s tax due
400,000 P800,000 30% P240,000 120,000 P120,000
Chapter 15 Problem 1 a. Philippine donor’s tax: On P2,000,000
P135,000
Allowable tax credit: Limitation 1 Netherlands (P600,000/P2M x P135,000) Actual Allowed
P 40,500 250,000 P40,500
Venezuela (P400,000/P2M x P135,000) Actual Allowed Total (Limitation 1)
P 27,000 120,000 27,000 P67,500
Limitation 2 (P1M/P2M x P135,000) Actual (P250,000 + P120,000) Allowed
P 67,500 370,000 P67,500
Tax credit to be deducted (either limitation)
P67,500
b. Philippine donor’s tax still due: Philippine donor’s tax Less: Tax credit Donor’s tax still due
P135,000 67,500 P 67,500
Problem 2 1a. Philippine donor’s tax: On P
500,000 700,000 x 8% P1,200,000
P15,000 56,000 P71,000 18
b. Allowable tax credit: Limitation 1 Cambodia (P400,000M/1.2M x P71,000) Actual Allowed Aruba (P200,000/P1.2M x P71,000) Actual Allowed Total (Limitation 1)
P23,666.67 10,000.00 P10,000 P11,833.33 2,000.00 2,000 P12,000
Limitation 2 (P600,000/P1.2M x P71,000) Actual (P10,000 + P2,000) Allowed
P35,500.00 12,000.00 P12,000
Tax credit to be deducted (either limitation)
P12,000
c. Philippine donor’s tax still due: Philippine donor’s tax ( computed in “a”) Less: Tax credit (computed in “b”) Donor’s tax still due
P71,000 12,000 P59,000
2a & c. On P500,000 100,000 x 8% P600,000
P15,000 8,000 P23,000
b. No allowable tax credit.
Chapter 17 True or False 1. T 2. T 3. F 4. T 5. T
6. 7. 8. 9. 10.
T T T T F
Multiple Choice 1. C 2. B 3. C 4. A 5. A
Problems Suysan Realty – next page please. 1. 2.
3.
P18,000 P250,000 x 12% = P30,000 P125,000 x 12% = P15,000 P100,000 x 12% = P12,000 P25,000 x 12% = P3,000 Not covered P50,000 x 12% = P6,000 P50,000 x 12% = P6,000 Total Output Tax = P72,000 P2,525,000 x 12/112 = P270,535.71 (a) P1,701,080 x 12% = P204,129.60 (b) P270,000 x 12% = P32,400 (c) VAT Due = ((a) + (c)) – ((b) + P18,500) = P80,306.11
Problem 1: Sales Scheme: no reservation, 10/40/50 Selling Price per Contract (excluding VAT), Jan. 5, 2012 Downpayment, Jan. 15, 2012 Balance Balance to be paid as follows: 40% in equal monthly amortizations 50% upon turnover
3,199,200 319,920 2,879,280
Given Given 10% 90%
1,279,680 1,599,600 2,879,280
40% 50% 90%
2,800,000
Given
36 35,546.67 426,560.00
Given
19
Zonal Value Term (in months) Monthly Amortization Total Monthly Amortizations (Jan. 31 to Dec. 31, 2012) Initial Payments (DP and MA during the year) Divided by: GSP (see if fair value is lower) Test (whether sale is on installment or on deferred-payment) What will be the basis of VAT? How much is the downpayment before VAT? What is the amount to be paid (ex-VAT) before turnover? How much will the monthly amortization (ex-VAT) be?
746,480.00 3,199,200.00 23.33%
12
did not exceed 25%
selling price per contract 319,920.00 1,599,600.00 35,546.67
What is the total amortizations (VAT inclusive) during the year of sale? What is the initial payments? Is this sale on installment or on deferred-payment basis? How much is the output tax related to the event on Jan. 15, 2012? How much is the output tax related to the event on Jan. 31, 2012? How much is the total output tax related to this sale for 2012?
477,747.20 746,480.00 on installment 38,390.40 4,265.60 89,577.60
Problem 2: Sales Scheme: no reservation, 10/50/40 Selling Price per Contract (excluding VAT), Jan. 5, 2012 Downpayment, Jan. 15, 2012 Balance Balance to be paid as follows: 50% in equal monthly amortizations 40% upon turnover Zonal Value Term (in months) Monthly Amortization Total Monthly Amortizations (Jan. 31 to Dec. 31, 2012) Initial Payments (DP and MA during the year) Divided by: GSP (see if fair value is lower) Test (whether sale is on installment or on deferred-payment)
2,700,000 270,000 2,430,000
Given Given 10% 90%
1,350,000 1,080,000 2,430,000
50% 40% 90%
2,525,000
Given
36 37,500.00 450,000.00
Given
720,000.00 2,700,000.00 26.67%
What will be the basis of VAT? How much is the downpayment before VAT? What is the amount to be paid (ex-VAT) before turnover? How much will the monthly amortization (ex-VAT) be? What is the total amortizations (VAT inclusive) during the year of sale? What is the initial payments? Is this sale on installment or on deferred-payment basis? How much is the output tax related to the event on Jan. 2012? How much is the output tax related to the event on Feb. 28, 2012?
12
exceeded 25%
selling price per contract 270,000.00 1,080,000.00 37,500.00 504,000.00 720,000.00 on deferred-payment 324,000.00 zero
Chapter 18 Multiple Choice 1. B 2. A 3. D 4. D 5. C
20
Chapter 20 Multiple Choice 1. B 2. B 3. D 4. C 5. A
6. D 7. C
Chapter 23 Multiple Choice Theory 1. B
1. A
6. B
11. D
Multiple Choice 1. B
6. D
11. B
2. 3. 4. 5.
B B B C
2. 3. 4. 5.
D C A B
Sales Taxpayer Price Concessionaire 100 Manufacturer 250 Wholesaler 450 Retailer 700 Household (Purchase Price)
7. 8. 9. 10.
D D D D
12. 13. 14. 15.
C B B C
2. 3. 4. 5.
Value Added 100
Output Tax 10
Input Tax 0
150 200 250 700
25 45
10 25
70
45
goods
P270,000 12,000* P542,000 17,000 P525,000 12% P 63,000
Add: Deemed sales-goods taken for personal use Gross taxable sales/receipts Deduct: Allowable sales returns & allow. Net taxable sales/receipts Multiply by Output tax
D B C B
VAT Payable 10 15 20 25 70
7. 8. 9. 10.
C C D D
12. D 13. A
Multiple Choice Multiple Choice Problem Problem 1. B 6. B 11. C 16. D 1. A 6. C 2. A 7. A 12. D 17. B 2. B 3. D 8. B 13. A 3. B 4. B 9. B 14. B 4. D 5. C 10. C 15. A 5. C SGB Corporation Total amount per invoice
Local purchases-services Total amount per invoice/receipt Less: Allowable purchase ret. & allow. Net purchases Multiply by Input Tax
P530,000 50,000 P320,000 7,500 P312,500 12% P 37,500
Advance VAT a) Invoice value (peso)* b) Customs duties & other charges except VAT c) 5% Mark-up (a + b) 5% (905,000 + 200,000) Total (a + b + c) Multiply by Tax base Multiply by VAT rate Advance VAT
P
905,000 (1)
a) Invoice value
200,000 55,250 P 1,160, 250 75% P870,187.50 12% P104,422.50
P800,000
b) Estimated freight expenses c) 5% Mark-up (a + b) 5% (800,000 + 18,000) Total (a + b + c) Multiply by Tax base Multiply by VAT rate Advance VAT
(2)
(3) (4)
18,000 40,900 P858,900 75% P644,175 12% P 77,301
*US$20,000 x P45.25 = 905,000
21
Multiple Choice Problem 1. B 2. C 3. D 4. D 5. D
6. 7. 8. 9. 10.
B B C B D
11. 12. 13. 14. 15.
C C D C B
16. 17. 18. 19. 20.
D A A D B
21. 22. 23. 24. 25.
B C C D D
26. 27. 28. 29. 30.
(1)
A A D D A
(2)
(3) (4)
Local purchases-
Multiple Choice Problem 1. A 6. D 2. D 7. B 3. D 8. B 4. B 9. A 5. D 10. A 11. Any answer is acceptable.
x
Multiple Choice Problem 1. A 2. A 3. B 4. A 5. C Amount of input tax
6. 7.
Multiple Choice Problem 1. B 2. B 3. A 4. B * 5. A
A D
Problem 1. B 2. A 3. C 4. C 5. A 6. D
*2012 = P11,832 (394,400 x 3%). Note that the receipts of P350,000 is below the new threshold of P394,400 (which is P98,600 per cab per quarter). Mr. A – Customs Broker (1) P120,000.00 = P770
Output Tax Due (P1,000,000 x 12%) Less: Input Taxes (a) Directly Attributable (1) Purchase of supplies (2) Freight services Total Purchases Multiply by VAT rate (b) Purchase of service common to both the activity subject to VAT and the activity not subject to VAT – P300,000 (Rental of office space) Rule on Apportionment: P1,000,000/P1,600,000* x P300,000 P1,000,000 VAT sale 600,000 Non-VAT sale P1,600,000 *Total Sales Net VAT Payable Problem 1. 20,000 2. 10,000 3. 8,000
4. 7,000 5. 9,000 6. 0
P200,000 80,000 P280,000 12%
P187,500 x 12%
(33,600.00)
(22,500.00) (2) P 63,900.00 (3)
7. 18,000 8. 5,000 9. 8,000
Q4: Input tax attributable to VAT-exempt sales for the monthInput tax on VAT-exempt sales Ratable portion of the input tax not directly attributable to any activity: VAT-exempt sales Total Sales P100,000 400,000
-
P2,000
not directly attributable x
P20,000
P5,000
22
Total input tax attributable to VAT-exempt sales
-
P7,000
Q5: Input tax attributable to sales to government for the monthInput tax on sale to government Ratable portion of the input tax not Amount of input tax x directly attributable to any activity: Taxable sales to government Total Sales P100,000 400,000
(2)
P4,000
not directly attributable
Total input tax attributable to sales
x P20,000 000
P5,
-
-
P9,000
to government Q7: Creditable input tax for the monthInput tax on sale subject to 12% Input tax on zero-rated sales Ratable portion of the input tax not directly attributable to any activity: Taxable sales (0% and 12%) Total Sales P200,000 400,000
-
P 5,000 3,000
not directly attributable x
P20,000
P10,000
-
Total creditable input tax for the month
-
P18,000
The table below shows a summary of the foregoing transactions of DBA Corporation: Input VAT directly attributable
Output VAT Sale subject to 12% VAT Sale subject to 0% VAT
12,000
5,000
0
3,000
Sale of Exempt Goods
Input VAT not directly attributable to any activity
Total Input VAT
5,000
x
Creditable Input VAT
10,000 (Q2)
10,000 (Q7)
Amount of5,000 input tax 8,000 (Q3)
Excess Input VAT for carry-over
Net VAT Payable
Input VAT for refund
2,000
8,000 (Q7)
0 0
Unrecoverable Input VAT 0
0
0
8,000 (Q9)
0
Sale to Govt. subject to 5% Final Withholding VAT
0
2,000
5,000
7,000 (Q4)
0 (Q6)
4,000
5,000
9,000 (Q5)
7,000**
0
0
7,000* 12,000
5,000♦ (Q8)
0
2,000* 20,000 (Q1) * These amounts are not available for input tax credit but may be recognized as cost or expense. **Standard input VAT of 7% on sales to Government as provided in Sec. 4.114-2(a). ♦ Withheld by Government entity as Final Withholding VAT.
23
Chapter 24 Problem 1. A (50,000 x 5%) 2. D (50,000 x 7%) 3. C (2,500 + 3,500) 4. A 5. D
0
Chapter 25 6. 7. 8. 9. 10.
D C A C B
Multiple Choice: Problem 1. C 1. A 2. A 2. D 3. D* 3. C 4. A 4. B 5. A 5. C
6. C 7. B
*15 x 21,900 x 3%
For nos. 8-10, please see computation below. Note: In 2010, upon pretermination, the loan agreement shall be
0
For nos. 4-6, please see computation below. Interest Income with Maturity of Less than Five Years
P100,000
Multiply by GRT Rate Rentals Multiply by GRT Rate Net Trading Gain for April 2012
5% P50,000 7% P20,000
Less: Net Trading Loss for March 2012
(10,000)
Adjusted Net Trading Gain Multiply by GRT Rate Total
P10,000 7%
P5,000
(4)
3,500
(5)
700 P9,200
(6)
P1,500,000 x 3% = P45,000 P750,000 x 12% = P90,000 P250,000 x 12% = P30,000 Total VAT = P120,000
VAT = 9M x 12% = P1,080,000 VAT = 9M x 12% = P1,080,000 % Tax = 9M x 3% = P270,000 VAT = 9M x 12% = P1,080,000 % Tax = 9M x 2% = P180,000 VAT = 8.65M x 12% = P1,038,000 % Tax = .35M x 10% = P35,000
UIOGD-AMDG
24
Professor’s Notes:
4 3 2 1 Less than 1 year 0
P100,000 100,000 100,000 100,000 100,000
5% 5% 5% 5%
P5,000 5,000 5,000 5,000 5%
5,00 P25,000
MVP Company 3. 4. 5. 6. 7. 8.
2008 2009 2010 2011 2012
Biyahe Pilipinas Bus 1. 2.
reclassified and the correct gross receipt tax, including prior years, shall be recomputed on the basis of the new category as shown hereunder: Gross Remaining Amount of Applicable Receipts Year Maturity Interest, etc. Tax Rate Tax
Total Gross Receipts Tax Less: GRT Previously Paid GRT Due as Recomputed
P25,000 9,000 P16,000
(8) (9) (10)
25
