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Assignment 2 Deductions

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Assignment 2 Deductions

Uploaded by

rolan.pana.shs
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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1.

An individual taxpayer had the following dealings in properties:


Capital gain P 150,000
Ordinary gain 200,000
Capital loss 120,000
Ordinary loss 150,000
Compute the total amount of gain to be included in gross income subject to
progressive tax.

2. A taxpayer had the following dealings in properties:


Capital gain P 100,000
Ordinary gain 200,000
Capital loss 120,000
Ordinary loss 150,000
How much shall be included in income subject to regular income tax?

3. Mr. Herman had the following dealings in capital assets:


Short-term capital gain P 200,000
Long term capital gain 100,000
Short-term capital loss 100,000
Long term capital loss 150,000
Compute the reportable net capital gain.
4. If Herman is a corporate taxpayer, compute the reportable net capital gain.

5. A taxpayer had a P300,000 net income before the following dealings in


properties:
Ordinary gain P 80,000
Capital gain 60,000
Ordinary loss 90,000
Capital loss 70,000
If the taxpayer is an individual, compute the taxable net income?

6. Assuming the taxpayer is a corporation, compute the taxable income.

7. In the immediately preceding problem, what is the net capital loss carry over
for an individual and a corporation respectively?

8. A taxpayer had the following dealings in properties:


Short-term capital gain P 200,000
Long-term capital gain 100,000
Short-term ordinary gain 50,000
Long-term ordinary gain 150,000
Short-term capital loss 100,000
Long-term capital loss 150,000
Short-term ordinary loss 200,000
Long-term ordinary loss 120,000
Assuming that the taxpayer is an individual, compute respectively the total item of
gross income and the total items of deductions from gross income.

9. Assuming that the taxpayer is a corporation, compute respectively the total


item of gross income and the total items of deductions from gross income.

10. Mr. Mayamaya, a dealer of household appliances, made the following


dispositions of properties during 2024:
Properties Date of acquisition Date of sale Gain Loss
Leasehold right 12/2/2021 2/27/2024 P 50,000
Taxi franchise 7/10/2019 3/14/2024 100,000
Electric oven 6/15/2024 7/15/2024 80,000
Residence 1/14/2023 7/3/2024 800,000
Compute the net capital gains subject to regular tax.

11. The accountant of TRIBOA Corporation provides for an allowance against


unrecoverable accounts equivalent to 3% of TRIBOA's total receivables. The
allowance for bad debts had a balance of P45,000 and at the start and end of the
year, respectively, while P30,000 of previous accounts were actually found to be
worthless and were written-off. What is the deduction against gross income
for purposes of taxation?

12. The taxpayer incurred the following in 2024:


Loss on sale of equipment to a subsidiary company P 400,000
Loss on sale of equipment to a sister company 100,000
Loss on liquidation of an affiliate company 200,000
What is the deductible amount of loss to a related party?

13. A taxpayer had the following losses during the year:


Estimated bad debt expense P 300,000
Writeoff of uncollectible accounts 150,000
Carrying value of property destroyed by fire 1,200,000
(The property is covered by insurance.)
Unrealized loss on foreign currency receivables 12,000
Assuming the taxpayer is under the accrual basis compute the total deduction.

14. Cavite Innovations Company incurred and paid the following expenses in 2023:
Salaries (1/8 unpaid) 400,000
Prepaid rent (2023 to 2025) 150,000
Depreciation expense 80,000
Purchase of supplies 60,000
Supplies used 25,000
Compute the total deductions under the cash basis for the year 2023.

15. A certain taxpayer paid the following bill from a VAT-registered supplier of
office supplies. The office supplies were all used in operation during the period:
Selling price P 400,000
Plus: Output VAT 48,000
Less: Withholding tax (1%) 4,000
Net cash due P444,000
What is the deductible supplies expense assuming the taxpayer is a VAT-
taxpayer?

16. What is the deductible supplies expense assuming the taxpayer is a non-
VAT taxpayer?

17. The following relates to a taxpayer:


Interest expense P 400,000
Interest income — time deposit 100,000
Compute the deductible interest expense.

18. The following relates to a taxpayer:


Interest expense P 400,000
Interest income promissory notes 100,000
Compute the deductible interest expense.
19. Gawan Merchandising paid P400,000 to employees, net of P60,000 total
withholding tax on compensation. What is the deductible amount of expense
by the employer?

20. The following data relate to an individual taxpayer:


Capital loss - current year P 80,000
Capital gain current year 150,000
Net capital loss - last year 90,000
Net income — last year 80,000
What is the net capital loss carry-over for the current period?

21. An individual taxpayer showed the following:


2023 2024
Gross income P 300,000 P 400,000
Deductible business expenses ( 360,000) ( 300,000)
Net capital gain or (loss) ( 50,000) 70,000
Compute the 2024 net income.

22. Assume in the immediately preceding problem that the taxpayer is a corporation.
What would be the taxable income in 2024?

23. Zambales Inc. made the following contributions during 2024:


Contributions to the government in non- priority activities P 60,000
Contributions to foreign charitable institutions 40,000
Contribution to accredited non-profit Institution 30,000
Contributions to foreign organizations with treaty exemption 100,000
Zambales Inc. has net income before contribution expense of P 1,000,000. Compute
the deductible contribution expense.

24. Germania Inc. employs three senior citizens as regular employees. Two of them
are receiving the minimum wage which is within the poverty level. Total
minimum wages paid to these senior citizen employees during the year were P
182,000. One of the senior citizen employees is a director of the company who
was paid P 780,000 compensation during the year. Compute the deductible
additional compensation expense.

25. A grantor irrevocably designated in trust a real property in favor of a beneficiary.


Under the trust indenture, 20% of the trust net income shall be distributed to the
beneficiary. The trustee shall be paid 5% of the gross income as management
fee. During the year, the trust collected P810,000 rent income, net of 10%
creditable withholding taxes. The trust recorded P350,000 in expenses.
Compute the deductible amount of income distribution to the beneficiary.

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