Beruflich Dokumente
Kultur Dokumente
EXERCISES
1-1
1.
2.
3.
4.
5.
6.
7.
8.
9.
10
.
D
F, K
I
EXERCISES
1-2
11 K
.
12 J
.
13 A
.
1.
2.
3.
4.
5.
6.
7.
8.
F
F
F
F
F
F
F
F
T
9.
10 T
.
EXERCISES 1
11
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12
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13
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14
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15
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16
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17
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18
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19
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20
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T
T
F
F
F
F
T
T
T
T
21
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22
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23
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24
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25
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26
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27
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28
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29
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30
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F
T
T
T
T
31
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32
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33
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34
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35
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F
F
T
T
T
T
F
F
F
T
EXERCISES 1
4
3
1.
11.
1.
2.
12.
2.
3.
13.
3.
4.
14.
4.
5.
15.
5.
6.
16.
6.
7.
17.
7.
8.
18.
8.
9.
19.
9.
10.
20.
10 C
.
11
.
12
.
13
.
14
.
15
.
16
.
17
.
18
.
19
.
20
.
B
A
A
C
C
B
D
A
C
B
2
1.
2
2.
2
3.
2
4.
2
5.
2
6.
2
7.
2
8.
2
9.
3
0.
A
A
D
D
C
31
.
32
.
33
.
34
.
35
.
D
C
B
A
A
D
C
D
B
C
EXERCISE 1 5
2|Page
Administrative regulations must always be in harmony with the provisions of
the law because any resulting discrepancy between the two will always be resolved
in favor of the basic law.
EXERCISE 1 6
YES. Double taxation means taxing twice the same property twice when it should be
taxed only once; that is taxing the same person twice by the same jurisdiction for the
same thing. Otherwise described as direct duplicate taxation, the two taxes must be
imposed on the same subject matter, for the same purpose, by the same taxing authority,
within the same jurisdiction, during the same taxing period; and the taxes must be of the
same kind or character.
There is indeed double taxation if respondent is subjected to the taxes under both
Sections 14 and 21 of Tax Ordinance No. 7794, since these are being imposed: (1) on the
same subject matter the privilege of doing business in the City of Manila; (2) for the same
purpose to make persons conducting business within the City of Manila to contribute to
city revenues; (3) by the same taxing authority the City of Manila; (4) within the same
taxing jurisdiction within the territorial jurisdiction of the City of Manila; (5) for the same
taxing periods per calendar year; and (6) of the same kind or character a local business
tax imposed on gross sales or receipts of the business.
Moreover, Section 143(h) may be imposed only on businesses that are subject to
excise tax, VAT, or percentage tax under the NIRC, and that are not otherwise specified in
preceding paragraphs.
EXERCISE 1 7
1.
2.
3.
4.
5.
Excise
Community
Due process
Donors tax
Shifting
7.
8.
9.
L
S
H
I
F
T
I
N
G
6. Lifeblood
Toll
School
Revenue
10. Tax amnesty
L
I
F
E
B
L
O
O
D
H
N
L
C
O
X
O
I
X
A
T
S
O
R
O
T
R
E
V
E
N
U
E
O
D
Y
T
S
E
N
M
A
X
A
T
D
EXERCISE 21
1.
3|Page
Moreover, interpretation of officers, of laws which are entrusted to their
administration, is entitled to great respect and have in their favor a
presumption of legality (Anscor Container Corporation v. CTA, GR No. 38052,
August 31, 1998).
2. I will inform him that a compromise is not allowed anymore because the case
has already been filed in court. The moment the case is filed in court, it cannot
be subject to compromise anymore.
3.
Piolo is correct. Under RA 1405 the BIR Commissioners power to inquire into
a taxpayers bank deposit is not in conflict with the Bank Secrecy Law. Based
on the provision of the NIRC, the Commissioner is authorized to inquire into
bank deposit:
a. To determine the gross estate of a decedent; and
b. When a taxpayer applies for a compromise of his tax liability by reason of
financial incapacity.
4. I will request for a compromise of the assessed tax on ground that the financial
position of the taxpayer demonstrates clear inability to pay the assessed tax.
Clearly, even if the case is decided against the taxpayer, he will not have the
money to pay the assessed tax. It is therefore an exercise in futility to forego
with the case against him.
5.
6.
The Commissioner may not grant the refund when there is a deficiency tax
assessment against the claimant-taxpayer. To award such refund despite the
existence of the deficiency assessment is an absurdity and a polarity in
conceptual effects (Commissioner vs. CA and Citytrust Banking Corp, 234
SCRA 348).
7.
Yes. Where a corporation paid quarterly corporate income taxes in any of the
first three quarters during the taxable year but incurs a net loss during the
taxable year, the two-year period for the filing of claim for refund or credit shall
be counted from the date of the filing of the annual corporate income tax return
(Commissioner vs. TMX Sales, 205 SCRA 184).
8. a. The counting of the two (2) year period commences to run from the date of
final payment. Considering that the final payment was made on July 9, 2009,
the prescriptive period will end on July 9, 2011.
b. Augusto has thirty days from receipt of the decision of the CIR to file an
appeal with the CTA. Since it was received on May 15, 2011, he has until
June 14, 2011 to file his appeal with the CTA.
c. He is given 30 days from receipt of the CIRs decision but not exceeding 2
years from the date of final payment. Hence, he has until July 12, 2011, or
the day following the receipt of the decision, to file an appeal with the CTA.
EXERCISE 2-2. MULTIPLE CHOICE
1.
2.
A
The National Bureau of Investigation and the Bureau of Immigration are
4|Page
under the Department of Justice.
The Bureau of Local Government Finance is under the Department of
Interior and Local Government.
3.
A
The BIR is inferior to the Court of Tax Appeals in terms of tax cases. Thus,
the BIR is not empowered to review the decision of a superior court.
4.
5.
6.
C
The power to decide tax cases is more of a power and duty of the
Commissioner rather than the Bureau of Internal Revenue.
7.
B
The Community Tax is levied under the Local Government Code of 1991.
The Overseas Communication Tax and the Gross Receipts Tax are
business taxes under Section 120 and 121, respectively, of the National
Internal Revenue Code.
The documentary stamp tax is levied under Title VII of the NIRC.
8.
A
The power to interpret the provisions of the NIRC is under the exclusive
original jurisdiction of the Commissioner of Internal Revenue, subject to
review by the Secretary of Finance.
9.
D
Under RA 1125, as amended, the decisions of the Commissioner of Internal
Revenue on cases pertaining to disputed assessments, refunds of taxes, fees
and other charges, penalties, etc. is appealable only to the Court of Tax
Appeals.
10
.
D
The limited power of the Commissioner does not conflict with RA 1405
because the provision of the Tax Code granting this power is an exception to
the Secrecy of Bank Deposits Law.
The Commissioner or his duly authorized representative may be allowed only
to inquire into the bank deposits of the taxpayer on the following cases:
a. To determine the gross estate of the decedent.
b. Where the taxpayer has filed an application for compromise of his tax
liability by reason of financial incapacity; and
c. When there is a waiver duly signed by the taxpayer.
11
C
Revenue Audit Memorandum Order, Revenue Special Order and Revenue
Travel Assignment Order are not exercises of legislative power.
Revenue Regulations are more detailed interpretation of the tax laws. It is
issued by the Secretary of Finance, upon the recommendation of the
Commissioner of Internal Revenue.
12
.
5|Page
The case cannot be compromised anymore if the case is filed already before
the courts of justice and if the case involves fraud.
13
.
14
.
B
Corporations are not allowed to be registered by the Securities and Exchange
Commission for the purpose of practice of public accountancy (RA 9298).
15
.
C
A withholding agent is a party in interest having sufficient legal interest to
bring a suit for refund of taxes illegally collected from him.
The claim for refund must be filed with the CIR before any suit in Court of
Tax Appeals is commenced.
The computation of the two-year period starts from the filing of the final
adjustment return because it was only then that it could be ascertained
whether the taxpayer made profits or incurred losses in its business
operations.
16
.
D
The last day to claim refund is June 30, 2009 or two (2) years from the date of
final payment.
17
.
A
Taxpayers are given 30 days from receipt of BIR decision but within two (2)
years from the date of payment, to appeal the decision to the Court of Tax
Appeals.
18
.
D
When the 2-year period is about to lapse, the suit or proceeding must be
started in the Court of Tax Appeals without awaiting for the decision of the
Commissioner, or the 30-days reglementary period from receipt of decision to
appeal to the CTA.
19
.
C
The best action is to file an appeal with the Court of Tax Appeals before
the lapse of the 2-year prescriptive period, without waiting for the decision of
the Commissioner of Internal Revenue.
20
.
D
The counting of the 30 day prescriptive period for appeal starts from the date
of receipt of the decision because it would be unfair on the part of the
taxpayer to include in the counting the date while the decision is still in the
table of the Commissioner or it is still in transit.
EXERCISE 23
The proper party to question, or seek a refund of an indirect tax is the statutory
taxpayer, the person on whom the tax is imposed by law and who paid the same even if he
shifts the burden thereof to another. Even if Petron passed on to Silkair the burden of the
6|Page
tax, the additional amount billed to Silkair for jet fuel is not a tax but part of the price which
Silkair had to pay as a purchaser.
An excise tax is an indirect tax where the tax burden can be shifted to the customer
but the tax liability remains with the manufacturer or producer.
The excise taxes are collected from manufacturers or producers before removal of
the domestic products from the place of production.
Although excise taxes can be
considered as taxes on production, they are really taxes on property as they are imposed
on certain specified goods.
When Petron removes its petroleum products from its refinery in Limay, Bataan, it
pays the excise taxes due on the petroleum products thus removed. Petron, as
manufacturer or producer, is the person liable for the payment of the excise tax as shown in
the Excise Tax Returns filed with the BIR. Stated otherwise, Petron is the taxpayer that is
primarily, directly and legally liable for the payment of the excise taxes. However, since an
excise tax is an indirect tax, Petron can transfer to its customers the amount of the excise
tax paid by treating it as part of the cost of the goods and tacking it on to the selling price.
Silkair as the purchaser and end consumer, ultimately bears the tax burden, but this
does not transform petitioners status into a statutory taxpayer.
In the refund of indirect taxes, the statutory taxpayer is the proper party who can
claim the refund.
Petitioner should invoke its tax exemption to Petron before buying the aviation jet
fuel. Petron, however, remains the statutory taxpayer on those excise taxes.
CHAPTER 3
EXERCISES
3-1
1. The partnership is not liable to pay income tax considering that no
income was earned during the year. The increase in the net assets was
caused by the additional contribution of P10,000 by the partners.
2.
3.
4.
P
100,000
20,000
80,000
b. Discount
x Due in 2008
Income subject to tax, 2008
P 20,000
50%
10,000
P 10,000
7|Page
6.
7.
Under the tax benefit rule, whenever a bad debt is claimed as deduction
from gross income and it resulted to a reduction in its tax liability, the
recovery of such is subject to tax. Thus, when Pamco wrote off the
accounts and claimed it as deduction from gross income, there was a
corresponding reduction in the tax liability. It being the case, the
recovery of such debt is taxable to PAMCO but only up to P90,000, the
amount that has been beneficial to PAMCO.
8.
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
Value-added tax
Real property tax
Income tax
Stock transaction tax
Special assessment
Occupation tax
Estate tax
Income tax paid to a foreign
country
Community tax
Excise tax
- not taxable
- taxable
- not taxable
- not taxable
- not taxable
- taxable
- not taxable
- taxable if claimed as
deduction
- taxable
- taxable
9.
10.
11.
8|Page
P
48,000
P 100,000
74,000
26,000
(26,000 / 18.5 x )
c.
703
48,70
3
Rent ( 4,000 x 6)
P24,0
00
Leasehold improvement:
Cost
P 100,000
Less: Depreciation - July 1, 2009 to
June 30, 2010 (100,000 / 25)
4,000
Book value upon termination
96,000
Less: Amount already reported as
703
income
Income of lessor in 2010
(1) ANSWER: D
Gross profit
Add: Bad debts
recovered
Total
800,0
00
30,00
0
830,00
0
95,2
97
119,2
97
9|Page
50,000
440,000
490,00
0
340,00
0
(2) ANSWER: D
Gross income before
taxes
Less: Deductible taxes
Amusement tax
Local business
taxes
Net loss
P
90,000
P 80,000
40,000
120,00
0
( 30,00
0)
ANSWER: B
Amusement tax
Local business taxes
Taxable income
80,0
00
8,500
88,500
ANSWER: C
This is an application of the tax benefit rule. Under this principle,
the recovery of bad debt previously deducted is taxable if at the time it
was claimed as deduction, there was a corresponding reduction in the
income tax liability of the taxpayer.
2.
ANSWER: C
See the explanatory notes in No. 11 above on tax benefit rule.
3.
ANSWER: D
The capital gains tax is an income tax, while the tax paid on inter
vivos donation is a donors tax. These taxes, including the value-added
tax, are not deductible from gross income from purposes of computing the
income tax. Thus, the refund received from these taxes are not subject to
tax.
The community tax paid by a corporation is a deductible item from
gross income. Hence, a refund received is taxable.
33.1:
1.
LEASEHOLD
IMPROVEMENT
ANSWER: B
Cash received
Tax paid by lessee
Income to be reported in 2006
120,000
3,000
123,000
10 | P a g e
2.
ANSWER: D
Rent income (5,000 x 12)
Leasehold improvement
Tax paid by lessee
Income to be reported under outright
method
60,000
1,800,000
3,000
1,863,000
ANSWER: A
Rent income
Tax paid by lessee
Leasehold improvement:
Cost
60,000
3,000
1,800,0
00
1,050,0
00
750,00
0
21,429
84,429
ANSWER: C
Effective January 1, 2009, the land and the building shall be exempt from
real estate tax because it is now being used actually, directly and exclusively
for educational purpose.
All assessments or reassessments made after the 1st day of January of
any year shall take effect on the 1st day of January of the succeeding year
(Sec. 221, Local Government Code of 1991).
5.
6.
ANSWER: B
Rent expense
Depreciation (1,800,000/17.5)
Deductible expense
60,000
102,857
162,857
ANSWER: B
Cash received
Leasehold improvement (750,000/17.5)
60,000
42,857
102,857
Note:
No real property tax will be shouldered by the lessee starting 2009
because the land and the building shall be exempt from real estate tax
considering that it is now being used actually, directly and exclusive for
educational purpose.
7.
ANSWER: C
Cash received (5,000 x 3)
Leasehold improvement:
Cost
Less:
Accumulated
depreciation
(1,800,000/30 x 3.75)
Book value upon termination
15,000
1,800,00
0
225,00
0
1,575,00
0
11 | P a g e
Less:
income
Amount declared as
2008
2009
2010
2011
21,429
42,857
42,857
42,857
Total
150,00 1,425,0
0
00
1,440,0
00
EXERCISE 3-3.2:
1.
ANSWER: A
Rent (2,000 x 12)
24,0
00
1,000,0
00
1,024,0
00
Leasehold improvement
Income using outright method
2.
ANSWER: C
Rent (2,000 x 12)
Leasehold improvement:
Cost
Depreciation for 9 years
(1,000,000/20 x 9)
Book value, end of lease
Annual income (550,000/ 9
years)
Income under spread-out method
3.
24,00
0
1,000,
000
450,0
00
550,00
0
61,111
85,111
ANSWER: C
Annual income reportable
x No. of years of reporting
Loss incurred by Bryant
61,11
1
____
1
61,111
36,0
00
600,00
0
300,0
00
300,0
00
12 | P a g e
1 20,00
5
0
56,00
0
EXERCISE 33.4
1.
ANSWER: A
The income from rent received by Vic is taxable to him, while the
amount given as loan is not because there was no gain realized by Vic
in this transaction. As a matter of fact, there was no gain realized
whether as payment for services, interest or profit from investment.
2.
ANSWER: C
Cost of improvement
Less: Depreciation for 8
years(P2,000,000/50 x 8)
Book value, end of lease
Rent income
Income from leasehold improvement
(P1,680,000 / 8)
Total income using spread-out method
3.
P
2,000,00
0
320,00
0
1,680,00
0
P
10,000
210,000
220,000
ANSWER: D
EXERCISE 34.1:
1.
ANSWER: D
Value of promissory note
Less: Discount (P120,000 x 20%)
Taxable income, 2007
2.
P
120,000
24,000
96,000
ANSWER: D
Discount
Less: Income to be reported in 2008
(24,000 x 50%)
Taxable income, 2009
24,00
0
12,000
12,000
EXERCISE 34.2:
1.
ANSWER:
P
50,000
12,500
37,500
ANSWER: B
Value of promissory note
P
50,000
13 | P a g e
37,500
12,500
EXERCISE 34.3:
1. ANSWER: C
Payment for services rendered by promissory note which can be
discounted, is taxable to the payee at its fair discounted value.
EXERCISE 3 5. MULTIPLE
CHOICE
1.
ANSWER: B
A schedular system of taxation is a system employed where the
income tax treatment varies and is made to depend on the kind or
category of taxable income of the taxpayer. It is distinguished from
global system in the sense that the latter is employed where the tax
system views indifferently the tax base and generally treats in common
all categories of taxable income of individual (Tan vs. Del Rosario, 237
SCRA 324, 331).
2.
ANSWER:
ANSWER:
ANSWER: C
Value-added tax, other percentage taxes and excise tax on certain
goods are taxes found under Titles IV, V and VI, respectively of NIRC,
which contain the provisions on business taxation; whereas, income
taxation is discussed in Title II of the same code.
5.
ANSWER: B
The amount of P3,000 raised by Mon is a gift which should be
excluded from gross income because when a financial aid is asked, that
means that there is no legally demandable obligation on the part of
other people to give him money.
6.
ANSWER: D
Income refers to earnings, lawfully acquired, without consensual
recognition, express or implied of an obligation to repay and without
restriction as to their imposition (James vs. US, 366 US 213).
14 | P a g e
7.
ANSWER: C
The amount received by Ceidi and Ador fall within the ambit of
income from whatever source derived because these are income not
expressly excluded or exempted from the class of taxable income.
The above phrase is so broad that it includes all income not
expressly excluded or exempted from the class of taxable income,
irrespective of voluntary or involuntary action of the taxpayer in
producing the income (Gutierrez vs. CIR, CTA Case No. 65).
8.
ANSWER: D
The amount of indebtedness cancelled due to services rendered by
the debtor is considered as compensation income. It is just like paying
an employee by an amount equivalent to the services he had rendered
to his employer-creditor.
9.
ANSWER: C
The money value of accumulated leave credits not exceeding 10
days is not taxable to the employee.
Travelling expenses received by an employee who was sent on a
business trip are not taxable to the employees provided that these
employees are required to liquidate said expenses.
Tips received by waitresses directly from customers which are not
accounted for by the employer to the employer are considered taxable
income.
1
0
ANSWER: D
If a corporation to which a stockholder is indebted forgives the
debt, the transaction has the effect of a payment of dividend (Sec. 5,
Rev. Regs. No. 2).
1
1
ANSWER: B
The money given to Lazaro is a remuneratory donation. It is
deemed an income, subject to income tax.
1
2
ANSWER: C
Tips
Liability condoned after rendering service
Taxable income
1
3
5,0
00
25,000
30,000
ANSWER: A
Selling price (115 x 200)
Less: Cost (100 x 200)
Gain on sale
Date
Cost per share
23,000
20,000
3,000
Shares
Total
Cost
15 | P a g e
1-24-2008
200
P 100
2-05-2008
200
110
4-12-2008 (400 x 5%) 20
420
New cost per share
(42,000/420) P 100
1
4
ANSWER:
P
20,000
22,000
-- .
42,000
23,00
0
19,046
3,954
Cost
1-24-2008
200
New
Cost
per
Share
210
P20,000
1
5
P
95.23
ANSWER: C
Market value of shares - Mina
Company
x No. of Common shares
Property dividend
1
6
120
150
18,000
ANSWER: D
Market value of stocks dividends
per share
Stock dividend received by Rosa (1,000 x
20%x10%)
Dividend income
1
7
30
20
600
ANSWER: A
Selling price (30 x 25)
Less: Cost (5,000/125) x 25
Loss
750
1,000
( 250)
Amount
Number
Shares
P 5,000
100
Dividend (100 x
25%)
25
Total
5,000
125
1
8
ANSWER: D
Sale of dividends (P60 x 40)
2,40
0
16 | P a g e
Less: Cost
200
(200
20
(200
11,0
00
-.
11,0
00
x P55)
x 20%)
220
(11,000/220) x P40
2,000
400
Gain on sale
1
9
ANSWER: A
Total sale (P400,000 + 50,000)
450,00
0
Less: Cost
240,00
0
35,0
00
275,00
0
175,00
0
12,50
0
187,50
0
E
R
&
I
N
G
3
EXERCISES 4-2
1 a Interest on corporate
. . bonds
b Salary
.
c Tips
.
d Winnings in lotto
.
e Winnings in jueteng
.
- Taxable
- Taxable
- Taxable
- Not taxable (expressly exempt under
the law)
- Taxable (income from whatever
source derived)
17 | P a g e
f.
g
.
2
.
The value of the free meals and lodging is not taxable to Yaya. It is
very clear that the couple required her to stay in their house for their
own benefit. Hence, the matter falls squarely within the convenienceof-the-employer rule.
3
.
No. The equivalent value of the living quarter is not taxable to Kulas
under the convenience-of-the-employer rule.
The purpose of the
piggery farm in providing Kulas a room inside the premises is for the
convenience of Habang Bata Pa Piggery Farm.
4
.
The excess of the laundry allowance in the amount of P450 (P750300) is part of gross income if such excess is beyond the P30,000
ceiling for other benefits.
The rental value of the residential property is subject to fringe
benefits tax which is subject to final tax. Therefore, not part of the
gross income.
6
.
ANSWERS TO EXERCISE 43
1.
ANSWER: C
Fringe benefit expense
Fringe benefit tax expense
34,00
0
16,000
18 | P a g e
Deductible expense
2.
ANSWER:
ANSWER:
50,000
34,0
00
68%
50,000
The fringe benefit tax is imposed only if the fringe benefit is given
to managerial or to supervisory employees.
Accounting clerks, janitors and the security guards are rank-andfile employees. Only the companys general manager is a managerial
or supervisory employee. Therefore, the fringe benefit tax must have
been given to him.
4.
ANSWER:
The one sack of rice is not subject to fringe benefit tax on the first
P1,000 per employee per month; the excess maybe also be exempt if
forming part of the other benefits not exceeding P30,000.
A corporation, though exempt from tax, is not exempt from the
payment of fringe benefit tax.
The equivalent value of free lodging given to a driver of an
obstetrician falls under convenience of the employer rule which is not
subject to fringe benefit tax.
The employers share in the GSIS contribution is not subject to
income tax.
EXERCISE 4-4
1.
ANSWER: B
Fees in civic club
Life insurance premium
Monetary value
Divide by
Grossed-up monetary value
Rate of tax
Fringe benefit tax
2.
ANSWER: B
Fees in a civic club
Life insurance premium
Total
Divide by
Grossed-up monetary value
Rate of tax
Fringe benefit tax
3.
5,000
15,400
20,400
68%
30,000
32%
9,600
ANSWER: B
5,000
15,400
20,400
68%
30,000
32%
9,600
19 | P a g e
ANSWER:
32,000
3,840
16,000
12,000
4,000
5,000
15,400
3,000
63,840
27,400
91,240
9,60
0
100,84
0
ANSWER:
4,000
3,000
65,000
EXERCISE: 45
1.
ANSWER: C
As a general rule, free meals and lodging furnished by the
employer to the employees are taxable to the latter. However,
allowances furnished for and as a necessary incident to the property
performance of his duties are not taxable because they fall under the
convenience of the employer rule.
2.
ANSWER: C
Tonys gross income is P9,500 because his employers residence
is not the place of business where the employer conduct a significant
portion of his business.
On the other hand, Berts gross income should not include the
monthly value of his free meals and living quarters because the
provision enables Cristy to avail of the services of Bert at her
convenience (RAMO 1-87).
3.
ANSWER: D
20 | P a g e
ANSWER: D
The grossed-up monetary value includes the monetary value of
the fringe benefit received by the employee from his employer and
the amount of fringe benefits tax due thereon which was paid by the
employer.
5.
ANSWER: D
The use of aircraft owned and maintained by the employer shall
be treated as business use and not subject to fringe benefits tax.
6.
ANSWER: D
Sikyo is a rank-and-file employee. All fringe benefits given by his
employer are not subject to fringe benefits tax.
The free meals and lodging given to Col. Corporal are specifically
exempt from fringe benefits tax. Moreover, it is also furnished for the
convenience of the employer (the Philippine Government) so that the
military officer shall be readily available when his services are
required. The uniform allowance falls under de minimis benefits
which are exempt from the fringe benefits tax.
7.
ANSWER: B
De minimis benefits are of relatively small value that they are
exempt from the payment of fringe benefits tax and ordinary income
tax.
8.
ANSWER: B
Fringe benefits given to rank and file employees are exempt from
fringe benefits tax. However, there are benefits which are subject to
regular income tax depending upon the nature of benefits the
employees have received from their employer.
9.
ANSWER: D
A residential property owned by the employer and assigned to an
employer for use as his residence is subject to fringe benefits tax
based on the 5% of the fair market value of the land and
improvements.
10.
ANSWER: D
Unlike other individual taxpayers, nonresident aliens not engaged
21 | P a g e
EXERCISES 4-6
1.
ANSWER: C
Purchase of groceries
Divide by
Grossed-up monetary value
Rate of tax
Fringe benefit tax
2.
ANSWER: A
Monthly salary
Free meals and living quarters (P1,500 +
1,000)
Monthly gross compensation income
3.
4,000
$
2,500
30
%
750
40
30,000
68%
44,117.
65
32
%
14,117.
65
ANSWER: D
Monetary value (P800,000/5) x 50%
Divide by
Grossed-up monetary value
Rate of tax
Fringe benefit tax
6.
6,500
ANSWER: D
Cost of first class ticket
5.
4,00
0
2,500
ANSWER: B
Salary
4.
10,50
0
68%
15,441
32%
4,941
80,00
0
68%
117,64
7
32%
37,647
ANSWER: B
Monetary value (P10,000 x 50%)
5,00
22 | P a g e
Divide by
Grossed-up monetary value
Rate of tax
Fringe benefit tax
7.
ANSWER: C
Interest at benchmark rate (P100,000 x
12% x 8/12)
Less: Interest at special rate (P100,000 x
9% x 8/12)
Interest foregone/value of benefit
Divide by
Grossed-up monetary value
Rate of tax
Fringe benefit tax
8.
Divide by
Grossed-up monetary value
Rate of tax
Fringe benefit tax
2,000
68%
2,941.1
8
32%
941.18
16,00
0
68%
23,529
32%
7,529
6,00
0
6,250
12,250
68%
18,015
32%
5,765
ANSWER: A
Fair market value (higher)
Divide by
Grossed-up monetary value
Rate of tax
Fringe benefit tax
11.
6,000
ANSWER: D
Salary of driver and housemaid (P4,000
+ 2,000)
Membership fees and dues (P75,000/12)
Monetary value of benefit
Divide by
Grossed-up monetary value
Rate of tax
Fringe benefit tax
10.
8,000
ANSWER: A
Total expenses incurred
9.
0
68%
7,352
32%
2,353
ANSWER: D
Monetary value (P3,400 x50%)
Divide by
Grossed-up monetary value
Rate
2,500,00
0
68
%
3,676,4
71
32
%
1,176,4
71
1,70
0
68%
2,500
32%
23 | P a g e
ANSWER:
800
3,400
3,000
7,200
170,000
68%
250,000
32%
80,000