Mr. Jug2x Ah2x a 47 yrs. old has 6 dependents and works @ Greeneration International Inc.

as a
company president. He rendered 15 yrs. of service & decided to retire from his work & focus on their
own business “Ulingan”.

Information about his 6 dependents

 Ralph, just turned 21, currently employed.
 Carlo, just married 20 yrs. old, unemployed
 CJ, his illegitimate son 14 yrs old, staying @ his mother
 Lola tinang 69 yrs old cannot walk because of her polio
 Kimmy, niece 10 yrs old, living with the taxpayer
 Ankol, his brother 60 yrs. old, unemployed, a disable person

Mr. Ah2x received the following from Greeneration:

Salary annual 840,000
13th month pay 70,000
Overtime pay 21,000/month
Bonus 20,000
Retirement Fee 1,400,000

Greeneration International Inc. also provides Mr. Ah2x the ff.

1. The company owns a residential house was assigned to Mr. Jug2x Ah2x. The said property has a
FVM of 10M & the BIR determined that it has a value of 12.5M.
2. The following fringe benefits where provided:
 House maid with monthly salary of P3,500 5 house maid
 Personal driver of the wife monthly sal. Of P6,000 1 driver
 House gardener & maintenance man monthly sal. P4,000 2
 Driver of the children attending school monthly sal P6,000 1
 Garbage dues P500/month
 Home owners’ monthly dues of P800

Ulingan has the following items at the closing of the year:

Sales on account 3,500,000
Cash Sales 1,533,500
Sales returns & allow. 255,350
Sales Discount 100,000
Merchandise inv. Beg. 60,000
Net purchases 150,000
Merchandise inv. End 90,000
Interest on bank deposits:
Philippines 33,000
America 15,000

Other income
1. Rent Income
Annual Rental 24,000
Security Deposit 18,000
Real Estate tax 4,700
2. Income from leasehold improvements (Spread out Method)
Cost of building constructed 15M
Useful 5 yrs
Term of the lease 3 yrs

3. Capital Gains
Long Term Capital Gain 100,000
Short Term Capital Gain 10,000
Long Term Capital Loss 12,000
Short term Capital Loss 6,000

4. Sale of Shares of Stocks

Outside the local stock exchange 10,000
Through the Local stock exchange 22,000
Sale of house in the Phil. (Principal Residence) 500,000
Sale of land in the Phil. 610,000
Sale of House in US 399,000

Expense:
Bad Debts 20,000
Charitable Contribution 100,000
Communication Exp. 5,000
Commission to employee 10,000
Depletion 10,000
Depreciation 30,000
Director’s fee 18,000
Fringe benefits 30,000
Fuel and oil 10,000
Insurance 20,000
Interest 19,500
Janitorial services 12,000
Losses 5,000
MC Fee 8,000
Miscellaneous 13,510
Office Supplies 5,000
Other services 11,000
Professional fees 4,500
Representation & entertainment 10,500
Research and Development 1,000
Royalties 1,500
Salaries & allowances 20,000
Security Services 18,000
SSS, GSIS, PhilHealth and other
Contribution 8,000
Taxes and licenses 9,900
NOLCO 12,350
Required:
Taxable Net Income
Net Taxable Income
Amount Subject to Final Tax
Final Tax Due

1-2.
Compensation Income Computation Rent Income
Annual Salary 840,000 Computation
Annual
Overtime Pay 252000 24,000
Rental
Retirement Fee 1,400,000 Real
13th Month Estate 4,700
pay 70,000 tax
Bonus 20,000 28,700
Less: Ceiling 82000 8,000
2,500,000 Income From Leasehold Improvement
Cost of building constructed 15M
Net Sales Computation Useful Life / 5 yrs
Cash Sales 1,533,500 3000000
Lease Term 3 yrs
Credit Sales 3,500,000
Sales Returns and 9000000
Allowances -255,350 Cost of building
constructed 15,000,000.00
Sales Discount -100,000
Accumualted
4,678,150 Dep. (9,000,000.00)
Carrying
Cost of Sales Computation Amount 6,000,000.00
Lease Term 3 yrs
Merchandise inv. Beg. 60,000
Net purchases 150,000
2,000,000.00
Merchandise inv. End -90,000
120,000 Interest Expense deductible
Interest
Capital Gains Computation Expense 19,500
Long Term Capital Gain 50000 Interest
Short Term Capital Gain 10,000 Income 33,000
Long Term Capital Loss -6000 x 33% 10890
Short term Capital Loss -6,000 8,610
48000
Itemized Deduction Computation Taxable Net Income Computation
Bad Debts 20,000 Compensation 2,500,000
Net Sales 4,678,150
Charitable Contribution 100,000
Interest on bank deposits USA 15,000
Communication Exp. 5,000 Capital Gains 48,000
Commission to employee 10,000 Leasehold improvement income 2,000,000
Depletion 10,000 Sale of house in US 399,000
Depreciation 30,000 Cost of Sales -120,000
Director’s fee 18,000 Itemized Dedcution -389,520
Fringe benefits 30,000 NOLCO -12,350
Fuel and oil 10,000 Taxable Net Income 9,118,280
Insurance 20,000 Basic Deduction -50,000
Interest 8,610 Addt'l Deduction -100,000
Janitorial services 12,000 Net Taxable Income 8,968,280
Losses 5,000
MC Fee 8,000 3-4.
Miscellaneous 13,510 Residential Privilege
FMV 12500000
Office Supplies 5,000 x
Multiply 5%
Other services 11,000
Actual Value 625000
Professional fees 4,500 x
Representation & Multiply 50%
10,500
entertainment
Monetary Value 312500
Research and Development 1,000 /
Royalties 1,500 Divide by GUM 68%
Salaries & allowances 20,000 Grossed Up monetary Value 459559
Security Services 18,000
SSS, GSIS, PhilHealth, HDMF House Hold Exp. Benefit
8,000
and other contribution House Maid 210000
Taxes and licenses 9,900 Personal Driver of wife 72000
389,520 House Gardener 96000
Driver of children 72000
Garbage dues 6000
Home Owners' Due 9600
Monetary Value 465600
Divide by GUM / 68%
Grossed Up monetary Value 684706
 Subject Final Tax And Final Tax Due

Amount Rate Tax Due

Residential Privilege 459559 32% 147058.8
House Hold Exp.
Benefit 684706 32% 219105.9
Interest income 33,000 20% 6600
Sale of shares outside
LSE 10,000 20% 2000
Sale of Land in the Phil. 610,000 6% 36600
1797265 411365