INCOME TAXATION 5TH Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS

107
Chapter 14: Withholding Taxes

CHAPTER 14

WITHHOLDING TAXES
Problem 14 1 TRUE OR FALSE 1. True 2. True 3. True 4. True 5. False final withholding taxes are not creditable. 6. False the tax is final tax, hence not required to file an income tax return. 7. False Business income is an income earned but not all subject to expanded withholding tax. 8. True 9. True 10. True 11. True 12. False all payments made by the government are net of withholding taxes. 13. True 14. True 15. True Problem 14 2 C Share from the professional partnership (P500,000 x 50%) Less: Creditable withholding tax (P250,000 x 10%) Amount received, net of withholding tax Problem 14 3 D Dividend income (P10 x 10,000) Less: Withholding tax on dividends income of NRFC (30%) Dividend income, net of withholding tax Problem 14 4 C Lease income Less: Withholding tax (P500,000 x 4.5%) Lease income, net of withholding tax Problem 14 5 B Tax informers fee Less: Withholding tax (P1,000,000 x 10%) Tax informers fee, net of withholding tax P250,000 25,000 P225,000 P 100,000 30,000 P 70,000 P 500,000 22,500 P 477,500 P1,000,000 100,000 P 900,000

Problem 14 6

SOLUTIONS

INCOME TAXATION 5TH Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS
a. Resident Citizen or Resident Alien 1. Interest on bank deposits a. Peso deposits b. Dollar account (FCDS) 2. Prize 3. Royalties on books 4. Capital gains on sale of real property 5. Property dividends 6. Compensation from OBU Nonresident Alien engaged in business 1. Interest on bank deposits a. Peso deposits b. Dollar account (FCDS) 2. Prize 3. Royalties on books 4. Capital gains on sale of real property 5. Property dividends 6. Compensation from OBU Nonresident Alien not engaged in business 1. Interest on bank deposits a. Peso deposits b. Dollar account 2. Prize 3. Royalties on books 4. Capital gains on sale of real property 5. Property dividends 6. Compensation from OBU Domestic Corporation 1. Interest on bank deposits a. Peso deposits b. Dollar account 2. Prize 3. Royalties on books 4. Capital gains on sale of property 5. Property dividends 6. Compensation from OBU Resident Foreign Corporation 1. Interest on bank deposits a. Peso deposits b. Dollar account 2. Prize 3. Royalties on books 4. Capital gains on sale of property 5. Property dividends 6. Compensation from OBU b. Nonresident Foreign Corporation 1. Interest on bank deposits a. Peso deposits b. Dollar account 2. Prize

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Chapter 14: Withholding Taxes

(P 50,000 x 20%) ($ 10,000 x 7.5%) (P100,000 x 20%) (P300,000 x 10%) (P1,000,000 x 6%) (P120,000 x 10%) (P400,000 x 15%)

P10,000 $ 750 P20,000 P30,000 P60,000 P12,000 P60,000

(P 50,000 x 20%) (P100,000 x 20%) (P300,000 x 10%) (P1,000,000 x 6%) (P120,000 x 20%) (P400,000 x 15%)

P10,000 Exempt P20,000 P30,000 P60,000 P24,000 P60,000

(P 50,000 x 25%) (P100,000 x 25%) (P300,000 x 25%) (P1,000,000 x 6%) (P120,000 x 25%) (P400,000 x 15%)

P12,500 Exempt P25,000 P75,000 P60,000 P30,000 P60,000

(P 50,000 x 20%) ($ 10,000 x 7.5%) (P300,000 x 20%) (P200,000 x 6%)

P10,000 $ 750 N/A P60,000 P12,000 Exempt N/A

(P 50,000 x 20%) ($ 10,000 x 7.5%) (P300,000 x 20%)

P10,000 $ 750 N/A P60,000 N/A Exempt N/A

(P 50,000 x 30%) (P100,000 x 30%)

P15,000 Exempt P30,000

INCOME TAXATION 5TH Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS
3. 4. 5. 6. Royalties on books Capital gains on sale of property Property dividends Compensation from OBU (P300,000 x 30%) (P120,000 x 30%)

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Chapter 14: Withholding Taxes

P90,000 N/A P36,000 N/A