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    Deductible Non-Deductible: Penalties

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    Ferl Elardo
    The document summarizes financial information for a company including gross sales, costs, expenses, income, deductions, penalties, losses, contributions and interest. It shows that the company had gross income of $4,000,000 and taxable income of $1,968,525 after deducting various expenses, contributions and losses. It provides details on the treatment of penalties, losses, contributions and interest as deductible or non-deductible for tax purposes.

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    Deductible Non-Deductible: Penalties

    Uploaded by

    Ferl Elardo
    36 views6 pages
    The document summarizes financial information for a company including gross sales, costs, expenses, income, deductions, penalties, losses, contributions and interest. It shows that the company had gross income of $4,000,000 and taxable income of $1,968,525 after deducting various expenses, contributions and losses. It provides details on the treatment of penalties, losses, contributions and interest as deductible or non-deductible for tax purposes.

    Original Title

    prob-5-AD

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    The document summarizes financial information for a company including gross sales, costs, expenses, income, deductions, penalties, losses, contributions and interest. It shows that the company had gross income of $4,000,000 and taxable income of $1,968,525 after deducting various expenses, contributions and losses. It provides details on the treatment of penalties, losses, contributions and interest as deductible or non-deductible for tax purposes.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    36 views6 pages

    Deductible Non-Deductible: Penalties

    Uploaded by

    Ferl Elardo
    The document summarizes financial information for a company including gross sales, costs, expenses, income, deductions, penalties, losses, contributions and interest. It shows that the company had gross income of $4,000,000 and taxable income of $1,968,525 after deducting various expenses, contributions and losses. It provides details on the treatment of penalties, losses, contributions and interest as deductible or non-deductible for tax purposes.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 6

    Gross sales 6,000,000.

    00
    Cost of sales (2,000,000.00)
    Gross Income from operations 4,000,000.00
    Total operating and non-operating expense (3,000,000.00)
    Non deductible Interest 60,000.00
    Non deductible Penalties 13,500.00
    Non deductible decline in value of properties 46,000.00
    Charitable contributions 1,900,000.00 (980,500.00)
    Gross income before charitable contributions 3,019,500.00
    Charitable contributions (1,050,975.00)
    Taxable income 1,968,525.00

    Deductible Non-deductible
    Penalties:
    Late filing and payment of income tax return 1,000.00
    Breach of lease contract 20,000.00
    Traffic violation 5,000.00
    Filing of income tax return in wrong R.D.O 12,500.00
    Total deductible penalties 25,000.00 13,500.00

    Decrease in value of properties: Deductible Non-deductible


    Unrealized loss from change in fair value of TS 16,000.00
    Loss from impairment of store equipment 30,000.00
    Loss from sale of investment property 70,000.00
    Loss from sale of office equipment 10,000.00
    Total deductible losses 80,000.00 46,000.00

    Total deductible contribution expense 1,050,975.00


    Deductible interest expense 105,200.00
    Total deductible penalties 25,000.00
    Total deductible losses 80,000.00
    Total Itemized deductions 1,261,175.00
    Final tax:
    Interest income from bank deposit 60,000.00
    Deductible in full Deductible with
    limit
    Itemized allowable deductions:
    Charitable Contributions:
    Government for education 200,000
    Government for health 600,000
    City Government of Pasig City 500,000
    Tahanang Walang Pinto, an accredit 100,000
    Bahay Walanga, unaccredited NGO 150,000
    Feeding Program to street dwellers
    UNICORN, an orphanage is North Dakota, U.S.A

    Actual
    City Government of Pasig City 500,000.00
    Bahay Walanga, unaccredited NGO 150,000.00
    Partially deductible contributions 650,000.00

    Taxable income before contribution 3,019,500.00


    Corporate tax rate, limit percentage 5%
    Deduction limit 150,975.00

    650,000.00
    Lower amount 150,975.00

    Fully deductible contributions:


    Government for education 200,000
    Government for health 600,000
    Tahanang Walang Pinto, an accredit 100,000 900,000.00
    Partially deductible contributions:
    City Government of Pasig City 500,000
    Bahay Walanga, unaccredited NGO 150,000
    Total contributions subject to limit 650,000
    Deduction limit 150,975.00
    Deductible contributions with limiy (LOWER) 150,975.00
    Total deductible contribution expense 1,050,975.00

    Deductible with
    Deductible in full
    limit
    Interest Expense:
    On tax deliquency 25,000.00
    On loans payable to Tina Quarantina, a share -
    On loans payable to Banco de Oro 100,000.00
    Total 125,000.00 0

    Interest expense 125,000.00


    Interest income from bank deposit 60,000.00
    Arbitrage rate 33%
    Limit 19,800.00
    Deductible interest expense 105,200.00
    Non deductible

    50,000
    300,000

    Non-deductible

    60,000.00
    60,000.00

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