INCOME TAXATION 5.

Stark Corporation, a domestic corporation, had the following selected data:

CO-OWNERSHIP, ESTATES AND TRUSTS; PARTNERSHIP AND CORPORATION YEAR GROSS INCOME EXPENSES
TRUE OR FALSE 2014 P1,000,000 P1,200,000
1. Resident foreign corporations are taxable in the Philippines on income earned in 2015 2,000,000 1,900,000
the United States. 2016 3,000,000 2,950,000
2. If a corporation distributes its assets to its stockholders upon dissolution, this 2017 1,000,000 1,100,000
kind of corporate distribution will result in stock dividends. 2018 980,000 500,000
3. A corporation which was registered with the Bureau of Internal Revenue in May, Determine the taxable income in 2018.
2011 shall be covered by MCIT in 2014. 6. Vers Corporation has the following data:
4. If the quarterly income tax is based on MCIT from the previous taxable year/s 2017 2018
shall not be allowed to be credited. Sales P1,700,000 P2,300,000
5. The property, rights and obligations of a person which are not extinguished by Cost of sales 1,050,000 1,425,000
his death and also those which have accrued thereto since the opening of the Operating expenses 615,000 480,000
succession is called estate. a. What is the income tax payable in 2017?
6. Devisee is an heir who inherits personal property by will. b. What is the income tax payable in 2018?
7. Revocable trusts render the trustor, not the trust itself subject to income tax. 7. Shield Corporation has the following data during the year:
8. Partners of a taxable partnership are considered as shareholders thereby profits 1st Quarter 2nd Quarter
distributed to them by the partnership are considered as dividends. Normal income tax P10,000 P12,000
9. A general professional partnership is exempt from income tax but is required to Minimum corporate income tax 8,000 25,000
file an income tax return for statistical purposes. Taxes withheld during the quarter 2,000 3,000
10. If a taxable partnership sustains net operating loss, the partners shall be entitled Excess MCIT prior year 3,000
to deduct their respective shares in the net operating loss from their individual Excess withholding tax prior year 1,000
gross income. a. What is the income tax payable for the 1st quarter?
b. What is the income tax payable for the 2nd quarter?
PROBLEMS 8. Pearson, Darby, Specter and Co., CPAs (PDS & Co.), are partners of an
1. Wes died on January 1, 2015. He left a gross estate with a cost of P4,000,000 accounting firm. The 2018 financial records of the firm disclosed the following:
but valued at P3,500,000 under an administrator. During the year, the gross Service revenue P4,490,000
income derived from the business of the estate was P400,000 while the related Cost of services 1,610,000
expenses amounted to P150,000. Beneficiaries Michaela and Laurel were given Operating expenses 800,000
P100,000 each. What is the income tax due on the estate of Wes? Rental income 500,000
2. In 2018, Olenna created two separate trusts for her son Mace, and appointed Interest income from bank deposit 200,000
Loras and Margaery as trustees. The business income of the trusts are as Interest income from FCDS deposit 280,000
follows: Specter is also engaged in business with the following data for the year:
Trustee Loras Trustee Margaery Sales P2,500,000
Net Income P1,200,000 P2,000,000 Cost of sales 1,250,000
Income from trusts 500,000 750,000 Operating expenses 550,000
a. What is the consolidated taxable income of trusts? a. How much is the distributive share of each partner in the total income of
b. What are the income taxes payable of Trustee Loras and Trustee the GPP?
Margaery? b. How much is the taxable income of Specter in 2018?
3. Snow Corporation, a domestic corporation has the following records of income c. How much is the taxable income of Specter in 2018 assuming PDS & Co.
and expenses in 2018: opted to use Optional Standard deduction?
Gross income, net of 1% withholding tax P1,435,500 d. How much is the taxable income of Specter in 2018 assuming the GPP
Expenses 756,000 and the partner opted to use Optional Standard deduction?
Rent income, net of 5% withholding tax 136,800 9. Bimbam and Company, a business partnership, had the following data of income
Expenses on rent 34,600 and expenses.
Dividend from domestic corporation 25,000 Gross income P750,000
Royalty 80,000 Expenses 200,000
Interest from bank deposit with PNB, gross of tax 15,000 Dividend from a domestic corporation 75,000
a. What is the income tax payable? Interest in bank deposit (gross of tax) 10,000
b. What is the total final taxes payable? Partners Bim and Bam share profits and losses in the ratio of 55% and 45%,
4. Hessington, Inc., a resident foreign corporation, has earned the following income respectively.
during 2018. a. What is the income tax payable of Bimbam and Company?
Dividend income from: b. What are the final taxes on the respective share of Bim and Bam in the
Microsoft, a non-resident corporation P500,000 partnership income?
Intel, a resident foreign corporation 400,000 10. Ghost, Nymeria and Company, a partnership of CPAs, had a gross income of
IBM, a domestic corporation 300,000 P220,000 and expenses of P85,000 during the year.
Interest income from: Ghost Nymeria
Current account, BDO 600,000 Share in profit and loss ratio 75% 25%
Savings deposit, ABN-AMRO bank, UK 700,000 Income from other business P125,000 P325,000
US dollar deposit (FCDU)-BPI Makati 800,000 Expenses 80,000 190,000
Royalty income from various domestic corporations 100,000 Amount withdrawn from partnership 30,000 12,500
Additional information: Filing status Married Unmarried
 The ratio of Microsoft’s gross income in the Philippines over Dependent children None 2
worldwide income for the past three years is 40%. a. What is the income tax payable of the partnership?
 The ratio of Intel’s gross income in the Philippines over worldwide b. What is the taxable income of Ghost and Nymeria?
income for the past three years is 60%.
 The ratio of IBM’s gross income in the Philippines over worldwide
income for the past three years is 80%.
a. How much is the total income tax expense of Hessington Inc.?
b. Assuming Hessington Inc. is a domestic corporation, how much is its total
income tax expense?