Multiple choice – Problems 2

6. Mr. Seigfried, a resident citizen, received P100, 000 dividend income from Vodka, Inc., a domestic
corporation. How much final tax must have been withheld by Vodka, Inc.?

a. P 0

b. P 11, 111

c. P 20, 000

d. P 25, 000

Solution: 100,000/90% = 111,111.11 x 10% = 11,111.11

Dividend income:

Individuals: RC, NRC, RA – received from a domestic corporation – 10%; NRA- engaged in business –
20%; NRA NE – 25%

WHAT IF: Dividend income received from a foreign corporation – active income – basic/regular tax.

Corporation – DC, RFC received a dividend income from a domestic corporation – exempt

- NRFC – domestic corporation – 30% subject to condition – tax sparing rule – 15%

WHAT IF: DC, RFC, NRFC received a dividend income from a foreign corporation – active income
– regular/ basic tax.

7. Ms. Gina owns 40% of the capital and profits of Cebu Ventures, a business partnership engaged in the
trade of tourist souvenirs. Cebu Ventures reported P200, 000 net income in 2014. Compute the total
final tax to be withheld by the partnership on Gina’s profit sharing.

a. P 0

b. P 8,000

c. P 10, 000

d. P 20, 000

Solution: 200,000 x 40% = 80,000 x 10% = 8,000

Persons Covered Income Tax: Natural person (individuals) and juridical person (corporation including
partnership) except for GPP and JV with the government undertaking CCPEG.

Share of the partner in the partnership.

RC, NRC, RA – 10% DC, RFC – intercompany dividend - exempt

NRA – engaged – 20% NRFC – 30%

NRA NETB – 25%

8. Raymond owns 20% of the capital and profits of a general professional partnership. The partnership
reported P500, 000 profits in 2014. How much final tax withheld from Raymond?

a. P 100, 000

b. P 50, 000

c. P 10, 000

d. P 0

Rule: GPP – non- taxable partnership; exempt

Taxable – general partner on their individual capacity – active income of the partner

9. Teddy is a venturer sharing 50% in the profits of Wise Ventures, an unincorporated joint venture,
engaged in the trading of home appliances. Wise Ventures reported P200, 000 profits for 2014. How
much final tax will be withheld by Wise Ventures?

a. P 0

b. P 10, 000

c. P 20, 000

d. P 40, 000

Solution: 200,000 x 50% x 10% = 10,000

JV – taxable or not? Taxable except for JV with the Government – CCPEG

TAXABLE VENTURE THOUGH UNICORPORATED…

10. Zamboanga Corporation, a resident corporation, is a venturer in Southern Philippine Ventures (SPV),
an incorporated joint venture formed under Philippine laws. Zamboanga owns 30% interest in SPV.
During 2014, SPV reported P3,000,000 profit and declared P1,000,000 in dividends. How much final tax
will be withheld from the dividend distribution to Zamboanga Corporation?

a. P 100, 000

b. P 30, 000

c. P 90, 000

d. P 0

Corp – received dividend income from SPV – domestic corporation – exempt- intercompany dividends
Multiple Choice – Problems 3

1. Mr. Aguak earned the following prizes from two different competitions:

Date Event Gross Prize

January 4, 2017 Singing competition P 12, 000

February 14, 2017 Painting Competition 10, 000

Compute the total final tax that should have been withheld from the above prizes.

a. P 5, 500

b. P 4, 420

c. P 3, 000

d. P 2, 400

Solution: 12,000 x 20% = 2,400

Prizes – appliable to individual; Corporation – active income

Prize – P 10,000 and less – subject to basic tax

Prize – P 10,000 and more – final tax – 20%, RC, NRC, RA, NRAETB but not NRANETB – 25%

Prizes were received from US – active income WHY: WITHIN THE PHILIPPINES LANG ANG SOURCE.

EXEMPTIONS:

1. Sport competition and regulated by the National Sports Association

2. Recipient of award – not voluntary; no substantial future services.

2. Mr. Rems Orayt participated in two different events on January 4, 2020:

Date Organizer Competition Gross Prize

January 4, 2020 Ang Mahiwagang Boses Singing P 10, 000

January 4, 2020 Sexy Body Foundation Dancing 11, 000

Compute the total final tax that should have been withheld from the above prizes.

a. P 0

b. P 4, 420

c. P 3, 000

d. P 2, 200 (11,000 x 20%) = 2,200

3. Mr. Conrado won the P50,000,000 6/49 Superlotto Jackpot of the Philippine Charity Sweepstakes
Office. How much final tax will be withheld?

a. P 500, 000

b. P 200, 000

c. P 100, 000

d. P 0

50,000,000 x 20% = 10M

Rules: Winnings

More than 10,000 – 20% final tax

10,000 or less – exempt

4. Ms. Matti won a gold medal and P50, 000 cash prize for chess competition in the Palarong Pambansa.
How much final tax should be withheld from the prize?

a. P 20, 000

b. P 10, 000

c. P 5, 000

d. P 0

5. Tiong Sang Department Store conducted a sales promotion where customer purchases exceeding
P1,000 in one transaction shall be entitled to a ticket for a chance to win P500, 000 raffle prize. Mr.
Shing won the prize.

How much shall Tiong Sang withhold from the grand prize?

a. P 200, 000

b. P 100, 000

c. P 50, 000

d. P 0

Solution: 500,000 x 20% = 100,000

6. Tacurong, a resident citizen, won $1,000,000 from the US lottery. The lottery winning is

a. exempts from tax

b. subject to 20% final tax

c. subject to 10% final tax

d. subject to regular tax

7. Mr. Curandang submitted a sworn statement regarding the alleged tax evasion practices of Chitie
Corporation. This led the BIR to recover P20,000,000 unpaid taxes. How much net tax informer’s reward
shall be paid to Mr. Curandang?

a. P 1,800,000

b. P 1,600,000

c. P 1,000,000

d. P 900,000

TAX INFORMER’S REWARD – 10% of the reward

10% of the amount to be recovered or P 1,000,000 whichever is lower.

Amount to be recovered 20M x 10% = 2M compare with 1M = 1M

1M x 10% = 100,000

Amount to be received by Mr. Curandang: 1M – 100T = 900,000

Except: government official; relatives within the 6 th degree

8. A concerned government employee furnished the BIR a statement detailing the improper tax
practices of a corporate taxpayer. The information was instrumental to the collection of P500,000 tax.
How much informer’s tax reward after tax shall be released to the informant?

a. P 0

b. P 40, 000

c. P 45, 000

d. P 50, 000

9. Roy invested P1,000,000in the “tax free” corporate bonds pf RBC Corporation. The bond pays 8. 75%
interest annually net of any taxes. How much final tax must RBC Corporation withhold from the annual
interest payment to Roy?
a. P 36, 000

b. P 16, 800

c. P 37, 500

d. P 0

10. A taxpayer wants to manually file his Monthly Remittance Return of Final Income Tax Withheld for
the month of February 2017. What is the deadline for the return?

a. February 14, 2017

b. February 28, 2017

c. March 10, 2017

d. April 15, 2017

11. In reviewing its tax compliance, Rang-ay Banco noted that it failed to remit the P90,000 final taxes it
withheld for the month of February 2017. Compute the total amount of taxes due including the
penalties if Rang-ay Banco settles the obligation on March 20, 2017.

a. P 90, 000

b. P 112, 500

c. P 113, 000

d. P 128, 000

Tax due:

Surcharge: 25% of the tax due – not willful not deliberate

50% of the tax due – willful

Compromise penalty: Table ng BIR

Interest: 12% of the tax due – from the due date - 2018

Solution: Due date: March 10, 2017 – 20%

Interest: 90,000 x 20% x 10/360 = 500

Surcharge: 25% x 90,000 = 22,500

Compromise penalty: 15,000

90,000 + 500 + 22,500 + 15,000 = 128,000

12. Bangko Illustrado failed to withhold the final tax on the P1,200,000 interest expense which was
credited to various accounts of individual depositors in the month of April 2016. It wants to settle the
unpaid final withholding tax on June 10, 2017. Compute the surcharge and interest penalty due.

a. P 450, 000

b. P 320, 000

c. P 64, 000

d. P 58, 000