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    Taxation Activity1

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    Creativexie Resin
    Glenda sued JL for libel and was awarded damages totaling P445,000 by the court. The summary income from the incident that Glenda must report is P100,000, which was her lost income. A retired hospital employee received a P2,000,000 gratuity in addition to their approved retirement pay. This additional amount is considered a taxable component of their compensation income rather than a gift or retirement pay. Life insurance proceeds received by Perla and Pedro upon Bruno's death are not currently taxable, but any income generated from investing the funds would be subject to taxation.

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    Taxation Activity1

    Uploaded by

    Creativexie Resin
    42 views2 pages
    Glenda sued JL for libel and was awarded damages totaling P445,000 by the court. The summary income from the incident that Glenda must report is P100,000, which was her lost income. A retired hospital employee received a P2,000,000 gratuity in addition to their approved retirement pay. This additional amount is considered a taxable component of their compensation income rather than a gift or retirement pay. Life insurance proceeds received by Perla and Pedro upon Bruno's death are not currently taxable, but any income generated from investing the funds would be subject to taxation.

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    Activity in Taxation

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    Taxation_Activity1

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    Glenda sued JL for libel and was awarded damages totaling P445,000 by the court. The summary income from the incident that Glenda must report is P100,000, which was her lost income. A retired hospital employee received a P2,000,000 gratuity in addition to their approved retirement pay. This additional amount is considered a taxable component of their compensation income rather than a gift or retirement pay. Life insurance proceeds received by Perla and Pedro upon Bruno's death are not currently taxable, but any income generated from investing the funds would be subject to taxation.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    42 views2 pages

    Taxation Activity1

    Uploaded by

    Creativexie Resin
    Glenda sued JL for libel and was awarded damages totaling P445,000 by the court. The summary income from the incident that Glenda must report is P100,000, which was her lost income. A retired hospital employee received a P2,000,000 gratuity in addition to their approved retirement pay. This additional amount is considered a taxable component of their compensation income rather than a gift or retirement pay. Life insurance proceeds received by Perla and Pedro upon Bruno's death are not currently taxable, but any income generated from investing the funds would be subject to taxation.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    ACTIVITY

    1. Glenda filed a libel case against JL for putting shame on him thru unfounded and
    defamatory remarks. Glenda was hospitalized due to the incident. As a result, JL
    was ordered by the court to pay the following:
    • Hospital dues of P120,000;
    • Actual damages of P50,000;
    • Exemplary damages of P60,000;
    • Loss of income amounting to P100,000; and
    • Moral damages of P115,000
    How much should be reported by Glenda as taxable income from the incident? Explain.
     Income loss of P100,000 was experienced. Since it constitutes her whole
    income, it is taxable.

    2. A taxpayer worked as an audit manager of a hospital for several years. When he


    retired at age 60, he received retirement pay equivalent to two (2) months' salary
    for every year of service as provided in the hospital's BIR-approved retirement
    plan. The hospital's Board of Directors felt that the hospital should give the retired
    employee more than what was provided for in the hospital's retirement plan, given
    his loyalty and invaluable services for several years. Hence, it is resolved to pay
    him a gratuity of P2,000,000 over and above his retirement pay.
    The Commissioner of Internal Revenue taxed the P2,000,000 as part of the gross
    compensation income of the retired employee, who protested that it was excluded from
    income because it was a retirement pay and a gift.
    Should the additional P2,000,000 received by the retired employee be excluded from income?
    Yes or No? Why?
     No, the P2,000,000 is a gratuity and is consequently taxed because it is
    viewed as a component of compensation.

    3. In 2018, Bruno obtained a life insurance policy on his own life in the amount of
    P2,000,000, designating ½ of the policy to his wife, Perla, as an irrevocable
    beneficiary. Bruno designated his son, Pedro, as a revocable beneficiary for the
    remaining 50% of the policy. On September 2021, Bruno died, and his wife and
    son went to the insurance company to collect the policy's proceeds.
    Are the proceeds of the insurance subject to income tax on the part of Perla and Pedro for their
    respective shares? Yes or No? Why?
     No, until they are used to generate income, insurance funds are not subject to
    taxation. This is due to the fact that while the proceeds of P2,000,000 are not
    taxable, the insurance income they get will be.

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