| Taxation on Individuals: Compensation and Business Income | | | | | |
| Kur da Pio has asked you to prepare his income tax return for the year ended (current year). | |
| The following pertains to his compensation income and business income. | | | |
| | a | Business income from his mini-department store attended to by his wife | | | 455,000 |
| | b | Monthly salary as supervisor in a manufacturing company | | | | | 45,000 |
| | c | 13th month salary for the current year | | | | | 45,000 |
| | d | Interest income from bank deposits for four quarters (net of withheld tax) | | | 2,566 |
| | e | Living quarter & meals during overtime jobs ( for convenience of employer) | | | 27,600 |
| | f | Monetized unused vacation leave payment for 10 working days | | | | | 15,000 |
| | g | Medical cash allowance to dependents (P125 per month) | | | | | 1,500 |
| | h | Rice subsidy per month (good variety) | | | | | 1,500 |
| | i | Uniforms and clothing allowance for the year | | | | | 4,000 |
| | j | Actual medical assistance on healthcare needs and check-ups | | | | | 10,000 |
| | k | Laundry allowance per month | | | | | 300 |
| | l | Employee achievement award for safety achievement with monetary value | | | 10,000 |
| | m | Christmans gifts and company anniversary celebrations (P2,500 each) | | | 5,000 |
| | n | Other benefits not included as part of de minimis (from E to L) | | | | | 12,000 |
| | o | 14th month bonus | | | | | 45,000 |
| | p | Advance rental deposit received under property lease | | | | | 25,000 |
| | r | Royalty received for property which produces timber | | | | | 30,000 |
| | s | Third prize award from a commercial contest | | | | | 10,000 |
| | t | Damage recovered in a patent infringement suit | | | | | 45,000 |
| | u | Lotto winnings | | | | | 12,000 |
| | v | Cost of Sales (80% of Business income for the year) | | | | 80% | 364,000 |
| | w | Business expenses - allowed as deductions | | | | | 45,500 |
| | x | Taxes - allowed as deduction (not part of business expense) | | | | | 18,200 |
| | y | Bad Debts - allowed as deduction (not part of business expense) | | | | 4,550 |
| | z | Charitable contributions to accredited associations for religious purposes | | | 10,000 |
| | aa | The taxpayer is married with five (dependent) children - refer to (latest) basic & personal exemption | |
| | bb | Premium paid on health and hospitalization insurance | | | | | 2,400 |
| | cc | Withheld tax on compensation (by his employer) during the year | | | | 81,000 |
| | | | | | | | | |
| Instructions: The answer sheet outlined below is your guide to answering these questions |
| | 1 | Gross Business Income (prepare your schedule of computation below) | | | |
| | 2 | Gross Compensation Income (prepare your schedule of computation below) | | |
| | 3 | Other Income received (prepare your schedule of computation below) | | | |
| | | | TOTAL GROSS INCOME (as computed for your guide) | | | | 788,000 |
| | 4 | Less: Total allowed business deductions (excluding charitable contributions) - schedule | |
| | 5 | Less: Charitable contribution allowed based on 10% limit (as computed for your guide) | 2,275 |
| | 6 | Less: Basic personal exemption (prepare schedule of computation below) | | | |
| | 7 | Less: Additional exemptions (prepare schedule of computation below) | | | |
| | 8 | Less: Premium paid on health and hospitalization insurance (if any) | | | |
| | | | TOTAL ALLOWABLE DEDUCTIONS (as computed for your guide) | | | 220,525 |
| | 9 | NET TAXABLE INCOME | | | | | |
| | 10 | TOTAL TAX DUE | | [(Refer to Sec 24 (A)] | |
| | 11 | TOTAL TAX STILL PAYABLE | | | | | |
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| Instructions: Using BIR form 1701, transfer your DETAILED computations/anwers indicated |
| | | | above to the proper columns as indicated. | | | | | |
| | | NOTE: ALL YOUR ANSWERS MUST BE BASED ON LATEST "TRAIN" LAW | |
| | | IF THE QUESTION IS NO LONGER APPLICABLE IN "TRAIN" LAW EXPLAIN THE DIFFERENCE and |
| | | INDICATE "NO LONGER APPLICABLE" as the case maybe | | | |
