Key Answer - Taxation

PAGE 107INCOME TAXATION 6TH Edition (BY: VALENCIA & ROXAS)

SUGGESTED ANSWERS

Chapter 15: Withholding Taxes

CHAPTER 15WITHHOLDING TAXES

Problem 14 1 TRUE OR FALSE

1. True

2. True

3. True

4. True

5. False final withholding taxes are not creditable.

6. False the tax is final tax, hence not required to file an income tax return.

7. False Business income is an income earned but not all subject to expanded withholding tax.

8. True

9. True

10. True

11. True

12. False all payments made by the government are net of withholding taxes.

13. True

14. True

15. True

Problem 14 2 C

Share from the professional partnership (P500,000 x 50%)P250,000

Less: Creditable withholding tax (P250,000 x 10%) 25,000

Amount received, net of withholding taxP225,000

Problem 14 3 D

Dividend income (P10 x 10,000)P 100,000

Less: Withholding tax on dividends income of NRFC (30%) 30,000

Dividend income, net of withholding taxP 70,000

Problem 14 4 C

Lease incomeP 500,000

Less: Withholding tax (P500,000 x 4.5%) 22,500

Lease income, net of withholding taxP 477,500

Problem 14 5 B

Tax informers feeP1,000,000

Less: Withholding tax (P1,000,000 x 10%) 100,000

Tax informers fee, net of withholding taxP 900,000

Problem 14 6 SOLUTIONS

a. Resident Citizen or Resident Alien

1. Interest on bank deposits

a. Peso deposits

b. Dollar account (FCDS)

2. Prize

3. Royalties on books

4. Capital gains on sale of real property

5. Property dividends

6. Compensation from OBU(P 50,000 x 20%)

($ 10,000 x 7.5%)

(P100,000 x 20%)

(P300,000 x 10%)

(P1,000,000 x 6%)

(P120,000 x 10%)

(P400,000 x 15%)P10,000

$ 750

P20,000

P30,000

P60,000

P12,000

P60,000

b. Nonresident Alien engaged in business

1. Interest on bank deposits

a. Peso deposits

b. Dollar account (FCDS)

2. Prize

3. Royalties on books

4. Capital gains on sale of real property

5. Property dividends

6. Compensation from OBU(P 50,000 x 20%)

(P100,000 x 20%)

(P300,000 x 10%)

(P1,000,000 x 6%)

(P120,000 x 20%)

(P400,000 x 15%)P10,000

Exempt

P20,000

P30,000

P60,000

P24,000

P60,000

c. Nonresident Alien not engaged in business

1. Interest on bank deposits

a. Peso deposits

b. Dollar account

2. Prize

3. Royalties on books

4. Capital gains on sale of real property

5. Property dividends

6. Compensation from OBU(P 50,000 x 25%)

(P100,000 x 25%)

(P300,000 x 25%)

(P1,000,000 x 6%)

(P120,000 x 25%)

(P400,000 x 15%)P12,500

Exempt

P25,000

P75,000

P60,000

P30,000

P60,000

d. Domestic Corporation

1. Interest on bank deposits

a. Peso deposits

b. Dollar account

2. Prize

3. Royalties on books

4. Capital gains on sale of property

5. Property dividends

6. Compensation from OBU(P 50,000 x 20%)

($ 10,000 x 7.5%)

(P300,000 x 20%)

(P200,000 x 6%)

P10,000

$ 750

N/A

P60,000

P12,000

Exempt

N/A

e. Resident Foreign Corporation

1. Interest on bank deposits

a. Peso deposits

b. Dollar account

2. Prize

3. Royalties on books

4. Capital gains on sale of property

5. Property dividends

6. Compensation from OBU(P 50,000 x 20%)

($ 10,000 x 7.5%)

(P300,000 x 20%)

P10,000

$ 750

N/A

P60,000

N/A

Exempt

N/A

f. Nonresident Foreign Corporation

1. Interest on bank deposits

a. Peso deposits

b. Dollar account

2. Prize

3. Royalties on books

4. Capital gains on sale of property

5. Property dividends

6. Compensation from OBU(P 50,000 x 30%)

(P100,000 x 30%)

(P300,000 x 30%)

(P120,000 x 30%)P15,000

Exempt

P30,000

P90,000

N/A

P36,000

N/A