milo tax

8/13/2019 milo tax

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1. Determine the types of income that each should declare in their Income

Tax Return for the year 2012. Prepare a list with the corresponding

amount of all returnable income of the spouses.

For Dindong

Salary amounting to P350,000 - compensation incomeDirector's fee of P10,000 - compensation incomePrize from tennis tournament sponsored by D! of P"0,000 - Prizes and #$ards inSports !ompetition%nterest on loan to a friend of P"0,000 - Passi&e %ncomeFied mont(ly transportation allo$ance of P15,000 - Fied transportation allo$ance)ain from disposition of s(ares of stoc*s of a foreign corporation of P100,000 -!apital #ssets

1+ Salary of 350,000 - compensation Sec+ 3" # 1 !ompensation for ser&ices in

$(ate&er form paid, including, but not limited to fees, salaries, $ages,

commissions, and similar items+ .(e ta rate is sec "/ # "

"+ epresentation allo$ance - "0,000 - t(is is not included+ %n general,

representation and ot(er allo$ances which are received by a public officer or employee

or officer or employee of a private entity, in addition to the regular compensation fixed for

his position or office, is compensation subject to withholding. The employee is required to

account/liquidate for the foregoing expenses in accordance with the specific requirements of

substantiation for each category of expenses pursuant to Sec. 3 of the !ode. The excess

of actual expenses over advances made shall constitute taxable income if such amount is

not returned to the employer. "easonable amounts of reimbursements/ advances for

travelling and entertainment expenses which are pre#computed on a daily basis and arepaid to an employee while he is on an assignment or duty need not be subject to the

requirement of substantiation and to withholding.

3+ free tuition - included as fringe benefit,3"

/+ asmine rice - it is considered as fringe benefit but only up to t(e amount of P1,

500+

2+ annual fees $it( ibp fringe benefit - ",0/0 and annual dues $it( #merican ar

#ssociation for 3,/00

4+ director's fee of 10,000 per meeting, included, 3" # 1 compensation for ser&ices

in $(ate&er form paid, including, but not limited to fees, salaries, $ages,

commissions, and similar items

6+ prize from tennis tournament sponsored by D! amounting to "0, 000 - included

- 3" 4 d Prizes and #$ards in Sports !ompetition - #ll prizes and a$ards and

granted to at(letes in local and international sports competitions and tournaments

8/13/2019 milo tax


$(et(er (eld in t(e P(ilippines or abroad and sanctioned by t(eir national sports

associations+

7+ %nterest on ban* deposit $it( 8etro an* amounting to 500,000 "/ 1 - "0

final ta

10+ interest on a loan to a friend amounting to "00,000 - taable,

11+ gain from sale of s(ares of stoc*s of P9D. $(ic( are not traded in t(e stoc*

ec(ange in t(e amount of 150,000 - "/ ! - 5 on first 100,000, and 10 on t(e

ecess

1"+ )ain from disposition from s(ares of stoc*s of a foreign corporation ac:uired in

"007

8arian

%tem .ype of %ncome #mountSalary !ompensation %ncome P/"0,000

1+ Salary of /"0,000 a mont( - compensation Sec+ 3" # 1 !ompensation for

ser&ices in $(ate&er form paid, including, but not limited to fees, salaries, $ages,

commissions, and similar items

"+ fied representation allo$ance - included, basis; lim boo*, (anapin

3+ a ne$ (onda cr& $ort( 1+32 8 fringe benefit - 3" Sec+ 33 3 - &e(icle of any*ind

/+ annual dues $it( P(ilippine 8edical #ssociation amounting to ",4"0

5+ cost of foreign tra&el to attend a seminar for mar*eting eecuti&es (eld in

<as(ington amounting to 1"0,000 - Sec+ 33 4 =penses for foreign tra&el

2+ #n interest free loan amounting to "8 released to (er in >anuary "01" payable in

3 years

4+ #nnual premium of "0,000 for an insurance ta*en by =P! amounting to " million

naming a $(olly o$ned subsidiary, #ble !orporation, as t(e beneficiary

6+ prize from a commercial raffle amounting to 10, 000 - "/ 1 - eempt, di

taable

7+ royalties paid by e oo*store on (er aut(ors(ip of a bestseller 8ar*eting oo*

publis(ed in "01", amounting to 1"0,000 "/ - 10

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2. ow much is the gross income of Dindong and !arian to be declared in

their income tax return.

For Dindong, it is 560,000 and 8arian it is /"0,000+

". ow should these incomes be reflected in the income tax return#

$xplain the procedures by citing pro%isions of the income tax law to

support your position.

&. Identify the incomes that are not re'uired to be declared in the income

tax return and gi%e reason for each. (lso indicate the amount of each

income you ha%e identified) the amount of tax thereon if sub*ect to tax) or

indicate if the income is exempt from income tax. +ite the legal bases for

each item.

,. how much is the amount of personal exemption -basic and additional

that Dindong and !arian may claim in their income tax return#

Dindong

"5, 000 for eac( dependent - 1 c(ild, already "1 on >anuary 15, "01"

50,000 for eac( indi&idual tapayer

8arian

50,000 for eac( indi&idual tapayer

/. hat are the deductions that can be claimed by Dindong and !arian#

Indicate the amount and the reason for their deductibility and cite your

legal bases.

usiness

%tem #mount eason and 9egal ases of

Deductibilityental =penses P"/0,000Purc(ases of =:uipment att(e start of t(e year

P"26,600

Spare Parts and ot(ersupplies

P450,000

Salaries of t$o mec(anics and cas(ier $ort( 122,//0 eac( or total of /77,3"0

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?azard pay, o&ertime pay and nig(t s(ift differential pay - 30,000

@asi yung ecess of "0,000 eac( in ecess of t(e 30,000 is already taable for t(e

t$o mec(anics

!ommissions;

70,000 for Panoy and 1"0,000 for #bnoy

"/0,000 rental epenses

1,"00,000 +1" A "/0,000 straig(t baseline met(od

450,000 - spare parts

. at are the items not deductible# i%e reasons and cite your legal

bases.

%tem #mount 9egal asesSalaries of t$o mec(anicsand cas(ier

P122,//0 3 A /77,3"0

?azard pay, o&ertime payand nig(t s(ift differentialpay

"0,000 " A /0,000mec(anics30,000 3 A 70,000t(ree employees

!ommissions 70,000 - Panoy1"0,000 - #bnoy

3. ow much is the taxable compensation income of Dindong and !arian#

i%e reasons for your computation and cite your legal bases.

4. ow much is the taxable buisiness income of Dindong and !arian# i%e

reasons for your computation and gi%e legal bases.

10. ow much is the respecti%e total taxable income -tax base of the

spouses#

11. ow much is the income tax liability per income tax return of Dindong

and !arian#

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12. hat are the donor5s tax implications of the donation made by the

spouses in 2012# Determine the amount of donor5s tax due from each

donation made.

"+0 million minus 10,000 deduction because donation made by parents to eac( of

t(eir legitimate, recognized natural, or adopted c(ildren to t(e etent of 10,000 onaccount of marriage and before its celebration+

1+78 +30 A 540,000

1". +alculate the 6(T exposure of Dindong and !arian for 2012

-annuali7ed determination and explain how you arri%ed at that amount.

1&. ow much is the taxable income of $P+ in its income tax return for

taxable year 2012# 8upport your answer with explanation and legal bases

of what should be included or excluded in your computations -both onincome and deductions.

500 8 - sales for "01"

5 8 - %n&entory

350 8 - $ort( of merc(andise sold

1,. +alculate the 6(T exposure of $P+ for 2012 and explain your position.

1/. $xplain the legal remedies a%ailable to $P+ on the 9inal (ssessment

:otice for taxable year 2011.

milo tax

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