1. Debtor Corporation (not classified as MSME) shows the following data during the 2021 taxable year:...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
1. Debtor Corporation (not classified as MSME) shows the following data during the 2021 taxable year: Sales Interest income, net of 20% final tax Cost of sales Salaries and wages Interest expense Rent expense Advertising expense Depreciation expense P500,000 24,000 300,000 120,000 60,000 24,000 6,000 5,000 5,000 Interest on unpaid taxes Required: How much is the allowable deduction from the gross income? Note that interest on taxes paid or accrued shall be deductible in full. It shall not be reduced by 20% of interest income subjected to final tax. 2. ABC Company incurred the following taxes during 2021: Documentary stamp taxes Income taxes paid in favor of key officers as a fringe benefit Income taxes paid in favor of rank-and-file employees as a fringe benefit Local taxes, including a surcharge of P800 and interest of P200 P1,000 13,600 22,400 6,000 100,000 Philippine income tax Municipal tax Community tax Value-added tax Compromise penalty on taxes Percentage tax paid on the sale of shares sold thru the local stock exchange Donor's tax for 2020 Foreign income tax payments claimed as tax credits Required: What is the correct amount of taxes that can be deducted from gross income? 2,000 1,500 90,000 50,000 12,000 25,000 10,000 Note the following: o interest on surcharges is deductible from gross income but as "interest expense," not as a tax expense. o Income taxes paid in favor of key officers as a fringe benefit is a fringe benefit tax expense classified as manpower cost or compensation expense. Fringe benefit tax (FBT) is a final tax of the employee, not the employer, withheld only by the latter for remittance to the BIR. Likewise, income taxes paid in favor of rank-and-file employees as a fringe benefit is also part of the compensation expense of the employer. a The following items are non-deductible expenses: income tax, value-added tax, compromise penalty on taxes, percentage tox paid on the sale of shares sold thru the local stock exchange, donor's tax, and foreign income on tax payments claimed as tax credits 3. On July 1, 2018, a lawyer purchased an automobile for P500,000, which will be used exclusively for the practice of the profession. He deducted annual depreciation based on an estimated useful life of five (5) years. On July 1, 2021, the automobile was partially damaged in an accidental collision with another vehicle. The vehicle's fair market value before the crash equals the carrying value of P200,000. After the collision, the fair value was determined at P100,000. The taxpayer received insurance proceeds of P70,000 to cover the loss. 1. Debtor Corporation (not classified as MSME) shows the following data during the 2021 taxable year: Sales Interest income, net of 20% final tax Cost of sales Salaries and wages Interest expense Rent expense Advertising expense Depreciation expense P500,000 24,000 300,000 120,000 60,000 24,000 6,000 5,000 5,000 Interest on unpaid taxes Required: How much is the allowable deduction from the gross income? Note that interest on taxes paid or accrued shall be deductible in full. It shall not be reduced by 20% of interest income subjected to final tax. 2. ABC Company incurred the following taxes during 2021: Documentary stamp taxes Income taxes paid in favor of key officers as a fringe benefit Income taxes paid in favor of rank-and-file employees as a fringe benefit Local taxes, including a surcharge of P800 and interest of P200 P1,000 13,600 22,400 6,000 100,000 Philippine income tax Municipal tax Community tax Value-added tax Compromise penalty on taxes Percentage tax paid on the sale of shares sold thru the local stock exchange Donor's tax for 2020 Foreign income tax payments claimed as tax credits Required: What is the correct amount of taxes that can be deducted from gross income? 2,000 1,500 90,000 50,000 12,000 25,000 10,000 Note the following: o interest on surcharges is deductible from gross income but as "interest expense," not as a tax expense. o Income taxes paid in favor of key officers as a fringe benefit is a fringe benefit tax expense classified as manpower cost or compensation expense. Fringe benefit tax (FBT) is a final tax of the employee, not the employer, withheld only by the latter for remittance to the BIR. Likewise, income taxes paid in favor of rank-and-file employees as a fringe benefit is also part of the compensation expense of the employer. a The following items are non-deductible expenses: income tax, value-added tax, compromise penalty on taxes, percentage tox paid on the sale of shares sold thru the local stock exchange, donor's tax, and foreign income on tax payments claimed as tax credits 3. On July 1, 2018, a lawyer purchased an automobile for P500,000, which will be used exclusively for the practice of the profession. He deducted annual depreciation based on an estimated useful life of five (5) years. On July 1, 2021, the automobile was partially damaged in an accidental collision with another vehicle. The vehicle's fair market value before the crash equals the carrying value of P200,000. After the collision, the fair value was determined at P100,000. The taxpayer received insurance proceeds of P70,000 to cover the loss.
Expert Answer:
Answer rating: 100% (QA)
1 Debtor Corporation Gross Income Sales P500000 Interest income net of 20 final tax P24000 Total Gro... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
Students also viewed these law questions
-
Consider the statement: If it is not documented, it did not happen. How is this relevant to the issue of coding Evaluation and Management (E/M) procedures and services? What if the visit is not...
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
A man drops a stone from a high bridge and hears it strike the water below exactly 4 s later. (a) Estimate the distance to the water based on the assumption that the travel time for the sound to...
-
The region in Exercise 75 is rotated about the -axis. Find the volume of the resulting solid.
-
If you put $100 per month in account earning 3% annual interest, compounded monthly for 10 years, how much can you withdraw from that account each month for the next year?
-
How does an objects interface relate to services that the object provides?
-
An office manager is concerned with declining productivity. Despite the fact that she regularly monitors her clerical staff four times each dayat 9:00 AM, 11:00 AM, 1:00 PM, and again at 3:00...
-
SY&I is a partnership owned by T . Shitang, D . Yamamoto, and J . Ishikawa, who share profits and losses in the ratio of 2 : 3 : 5 respectively. The adjusted trial balance of the partnership ( in...
-
You are working on a free-form Packet Tracer challenge activity as seen in Figure 1, you have been given the London Railways network.' The purpose of this EMA question is to build upon each of the...
-
A company should pursue related diversification instead of unrelated diversification when the company's: Core skills are highly specialized and have few applications outside the core business. Core...
-
Explain the difference between the following: concessionary system contractual system
-
Define the following terms: domestic market obligation ringfencing cost oil profit oil capital uplift production bonus sliding scale royalty tax holiday royalty holiday government participation
-
In situations where a significant development expenditure has been made, but a portion of the related proved reserves are not yet developed, it is necessary to a. Exclude a portion of the development...
-
The price at ____________ is typically used as the price benchmark for spot trades of natural gas. a. WTI b. US Gulf Coast c. Rotterdam/Northwest Europe d. Henry Hub e. None of these
-
_____________is a measure that may be used to evaluate the extent to which a company is controlling its operating costs or how efficiently the company is getting oil and gas out of the ground, or...
-
Define the liposome, classify them (based on structural parameters) and discuss the application of the same.
-
Find the equations of the ellipses satisfying the given conditions. The center of each is at the origin. Passes through (2, 2) and (1, 4)
-
Bev and Ken Hair have been married for 3 years. They live at 3567 River Street, Springfield, MO 63126. Ken is a full-time student at Southwest Missouri State University (SMSU) and Bev works as an...
-
On February 2, 2012, Alexandra purchases a personal computer for her home. The computer cost $3,000. Alexandra uses the computer 80 percent of the time in her accounting business, 10 percent of the...
-
Olive Corporation was formed and began operations on January 1, 2012. The corporation's income statement for the year and the balance sheet at year-end are presented below. The corporation made...
-
Calculate the volatility and the current price of oil futures implied by the call 1600 August and the call 1700 August of Figure 19.8 by using the Black-Scholes formula with \(T=.25\). OIL CRUDE OIL...
-
A company issues a \(10 \%\) coupon bond that matures in 5 years. However, this company is in trouble, and it is estimated that each year there is a probability of .1 that it will default that year....
-
Consider a continuous-time environment, with \(e\) as a variable outside of the market. (a) Suppose the final payoff is \(V\left(x_{e}, T ight)=x_{e}(T)\). Find \(V\left(x_{e}, t ight)\). (b) Find a...
Study smarter with the SolutionInn App