Solution for No.

11:
Gross Income ₱ 1,500,000.00
Income Tax Rate 25%
Income Tax Due ₱ 375,000.00
Foreign Corporations not engaged in trade or business are taxed at 25% based on their gross income.

Solution for No. 12:

Related Activity Unrelated Activity Total
Gross Receipts ₱ 8,000,000.00 ₱ 4,000,000.00 ₱ 12,000,000.00
Less: Cost of Services 3,000,000.00 1,400,000.00 4,400,000.00
Gross Income 5,000,000.00 2,600,000.00 7,600,000.00
Less: Allowable deduction 1,500,000.00 1,200,000.00 2,700,000.00
Taxable Income ₱ 3,500,000.00 ₱ 1,400,000.00 4,900,000.00
Tax Rate 1%
Income Tax Due ₱ 49,000.00

Solution for No. 13:

Gross Income - Related activities ₱ 10,000,000.00 45%
Gross Income - Unrelated activities 12,000,000.00 55%
Total Gross Income 22,000,000.00
Less: Allowable deductions 10,500,000.00
Taxable Income 11,500,000.00
Tax Rate 25%
Income Tax Due ₱ 2,875,000.00
Income from unrelated activities is more than 50% of the total gross income, hence, tax rate used is
regular tax rate for corporations instead of the 1% special rate.

Solution for No. 14:

Sales ₱ 17,000,000.00
Less: Cost of Sales 10,500,000.00
Gross Income 6,500,000.00
Less: Operating Expense 7,150,000.00
Net Loss -₱ 650,000.00

MCIT (P6.5M x 1%) ₱ 65,000.00

Solution for No. 15-16:

Eddard Catelyn
Gross Income ₱ 2,200,000.00
Less: Expenses 850,000.00
Taxable Income ₱ 1,350,000.00 ₱ 1,350,000.00 ₱ 1,350,000.00
P/L Ratio 75% 25%
Share in Partnership Income 1,012,500.00 337,500.00
Add: Net Income from personal business
Eddard (125,000 - 80,000) 45,000.00
 Catelyn (325,000 - 190,000) 135,000.00
Taxable Income ₱ 1,057,500.00 ₱ 472,500.00

Solution for No. 19-20:

No. 19:
Gross Income ₱ 1,200,000.00
Less: Expenses 850,000.00
Taxable Income 350,000.00
Tax Rate 1%
Income Tax Due ₱ 3,500.00

No. 20:
Gross Income ₱ 3,500,000.00
Less: Expenses 2,240,000.00
Taxable Income ₱ 1,260,000.00

Income Tax Due:

January-June 2023: (1,260,000 x 1%) x 6/12 ₱ 6,300.00
July-December 2023: (1,260,000 x10%) x 6/12 63,000.00
Total Income Tax Due ₱ 69,300.00
Special Income Tax rate for proprietary school/educational institutions is 1% from Jan. 1-Jun. 30, 2023
and 10% from July 1 onwards.

Solution for No. 21-23:

No. 21:
Gross Income ₱ 7,500,000.00
Less: Expense 2,000,000.00
Taxable Income 5,500,000.00
Tax Rate 25%
Income Tax Due ₱ 1,375,000.00

No. 22-23:
Taxable Income ₱ 5,500,000.00
Less: Tax Paid 1,375,000.00
Income for distribution to partners ₱ 4,125,000.00

Daenerys Viserys
Income for distribution ₱ 4,125,000.00 ₱ 4,125,000.00
P/L Ratio 55% 45%
Partner's share in net income 2,268,750.00 1,856,250.00
Final Tax Rate 10% 10%
Final Tax Due ₱ 226,875.00 ₱ 185,625.00
Solution for No. 24-27:
No. 24:
Gross Income ₱ 500,000.00
Less: Expenses 150,000.00
Taxable Income 350,000.00
Add: Other Taxable Income
Rent ₱ 60,000.00
Share in net income/loss of partnership:
A (400,000 - 250,000) x 60% 90,000.00
B (300,000 - 500,000) x 60% - 120,000.00 30,000.00
Total Taxable Income ₱ 380,000.00

Tax Due: Tax on P250,000 ₱ -

P130,000 x 30% 26,000.00
Total Income Tax Due of Arya ₱ 26,000.00

No. 25:
Gross Income ₱ 600,000.00
Less: Expenses 270,000.00
Taxable Income 330,000.00
Add: Other Taxable Income
Share in net income/loss of partnership:
A (400,000 - 250,000) x 40% ₱ 60,000.00
B (300,000 - 500,000) x 40% - 80,000.00 - 20,000.00
Total Taxable Income 310,000.00

Tax Due: Tax on P250,000 ₱ -

P60,000 x 20% 12,000.00
Total Income Tax Due of Sansa ₱ 12,000.00

No. 26:
Final Tax on:
Dividend - domestic company (P30,000 x 10%) ₱ 3,000.00
Share in Partnership C income (P40,000 x 10%) 4,000.00
Total Final Taxes due of Arya ₱ 7,000.00

No. 27:
Final Tax on:
Dividend - domestic company (P50,000 x 10%) ₱ 5,000.00
Share in Partnership C income (P20,000 x 10%) 2,000.00
Royalty (P50,000 x 20%) 10,000.00
Total Final Taxes due of Sansa ₱ 17,000.00

Solution for No. 28-30:

No. 28:
Taxable Income, Trustee - Lucerys ₱ 120,000.00
Taxable Income, Trustee - Joffrey 200,000.00
Consolidated taxable income ₱ 320,000.00

No. 29-30:
Consolidated taxable income ₱ 320,000.00

Tax on P250,000 ₱ -
P70,000 x 20% 14,000.00
Income tax due ₱ 14,000.00

Income tax payable by:

Lucerys: (P120,000 / 320,000) x P14,000 ₱ 5,250.00
Joffrey: (P200,000 / 320,000) x P14,000 ₱ 8,750.00

Solution for No. 31-32:

No. 31:
Gross Sales ₱ 45,600,000.00
Less: Cost of Sales 8,700,000.00
Net Sales 36,900,000.00
Add: Non-operating income 300,000.00
Gross Income 37,200,000.00
Less: Expenses 36,700,000.00
Taxable Income 500,000.00
Tax Rate 20%
Normal Income Tax (NIT) 100,000.00

MCIT (P37,200,000 x 1%) 372,000.00

Income Tax due (Whichever is higher between NIT and MCIT) 372,000.00

No. 32:
Gross Sales ₱ 40,350,000.00
Less: Cost of Sales 10,200,000.00
Net Sales 30,150,000.00
Add: Non-operating income -
Gross Income 30,150,000.00
Less: Expenses 26,850,000.00
Taxable Income 3,300,000.00
Tax Rate 20%
Normal Income Tax (NIT) ₱ 660,000.00

Minimum Corporate Income Tax (MCIT):

MCIT (P30,150,000 x 1%) x 1/2 ₱ 150,750.00
MCIT (P30,150,000 x 2%) x 1/2 301,500.00
Total MCIT ₱ 452,250.00

Income Tax due (Whichever is higher between NIT and MCIT) ₱ 660,000.00
Less: Excess MCIT Carry-over from 2022
(P372,000 - P100,000) 272,000.00
Income tax payable ₱ 388,000.00
MCIT from Jan. 1-June 30, 2023 is 1% and from July 1 onwards is 2%.

There is an excess MCIT carried over from 2022 because the MCIT in 2022 (P372,000) is higher than the
NIT in 2022 (P100,000).

Solution for No. 33-35:

No. 33:
Gross Income ₱ 5,036,000.00
Less: Deductions 4,000,000.00
Taxable income for 1st Quarter 1,036,000.00
Tax Rate 25%
Income tax due 259,000.00
Less: Tax credits
Excess tax credits in 2021 ₱ 12,500.00
Tax credits - 1st Quarter 2022 6,800.00 19,300.00
Income tax payable - 1st Quarter ₱ 239,700.00

No. 34:
Gross Income ₱ 8,536,000.00
Less: Deductions 7,700,000.00
Taxable income for 2nd Quarter 836,000.00
Add: Taxable income previous quarter 1,036,000.00
Total taxable income 1,872,000.00
Tax Rate 25%
Income Tax due 468,000.00
Less: Tax credits
Excess credits in 2021 ₱ 12,500.00
Tax credits - 1st Quarter 2022 6,800.00
Tax credits - 2nd Quarter 2022 8,800.00
Income tax payable - 1st Quarter 2022 239,700.00 267,800.00
Income tax payable - 2nd Quarter ₱ 200,200.00

No. 35:
First, compute for the Income Tax payable for 3rd Quarter:
Gross Income ₱ 8,048,000.00
Less: Deductions 6,400,000.00
Taxable income for 2nd Quarter 1,648,000.00
Add: Taxable income - 1st Quarter ₱ 1,036,000.00
Taxable Income - 2nd Quarter 836,000.00 1,872,000.00
Total taxable income 3,520,000.00
Tax Rate 25%
Income Tax due 880,000.00
Less: Tax credits
Excess credits in 2021 ₱ 12,500.00
Tax credits - 1st Quarter 2022 6,800.00
Tax credits - 2nd Quarter 2022 8,800.00
Tax credits - 3rd Quarter 2022 10,400.00
Income tax payable - 1st Quarter 2022 239,700.00
Income tax payable - 2nd Quarter 2022 200,200.00 478,400.00
Income tax payable - 3rd Quarter ₱ 401,600.00

Then compute for the annual Income tax payable/refund for the year:
Gross Income (1st to 4th Quarter) ₱ 29,368,000.00
Less: Expenses (1st to 4th Quarter) 23,850,000.00
Taxable Income 5,518,000.00
Tax Rate 25%
Income Tax due 1,379,500.00
Less: Tax credits
Excess credits in 2021 ₱ 12,500.00
Tax credits - 1st Quarter 2022 6,800.00
Tax credits - 2nd Quarter 2022 8,800.00
Tax credits - 3rd Quarter 2022 10,400.00
Tax credits - 4th Quarter 2022 9,150.00
Income tax payable - 1st Quarter 2022 239,700.00
Income tax payable - 2nd Quarter 2022 200,200.00
Income tax payable - 3rd Quarter 2022 401,600.00 889,150.00
Income tax payable ₱ 490,350.00