Transfer and Business Tax 2014- Ballada

TRANSFER AND BUSINESS TAXATION BY WIN LU BALLADA 2014 Chapter 2 True or False True or False1. T 6. F 11. F 1. F 6. T2. T 7. F 12. F 2. T 7. F3. T 8. T 13. F 3. T 8. T4. F 9. F 14. T 4. T 9. F5. T 10. T 15. T 5. T 10. TMultiple Choice Multiple Choice Multiple Choice1. D 6. A 1. C 6. A 1. B 6. A2. A, B, D 7. D 2. A 7. B 2. B 7. D3. C 8. B 3. D 8. D 3. D 8. B4. C 9. C 4. C 9. B 4. C 9. B5. B 10. A 5. B 10. B 5. B 10. C

Chapter 3True or False True or False Multiple Choice Multiple Choice1. T 6. F 1. F 6. T 1. A 6. B 1. C 6. B2. T 7. T 2. T 7. T 2. C 7. D 2. D 7. B3. T 8. T 3. T 8. T 3. D 8. A 3. A 8. A4. T 9. T 4. T 9. T 4. B 9. C 4. B 9. C5. F 10. T 5. T 10. F 5. D 10. A 5. C 10. DIdentification IdentificationClassification of Property Classification of Property1. A 6. B 11. C 16. B 1. A 6. C 11. C 16. B2. A 7. B 12. C 17. C 2. A 7. A 12. C 17. C3. C 8. C 13. C 18. A 3. C 8. C 13. C 18. A4. A 9. B 14. C 19. C 4. C 9. B 14. C 19. C5. A 10. B 15. C 20. C 5. A 10. B 15. C 20. C

21. C 21. A22. B23. A

Identification ProblemKind of Transfer Adequacy of Consideration1. A 6. A A. 0 A. P900,0002. B 7. C B. P750,000 B. P400,0003. B 8. D C. P1.25M C. 04. D 9. A5. C 10. C

Essay1. Proceeds shall form part of the gross estate because the beneficiary is the estate. This is regardless of whether the designation is revocable or

irrevocable.2. Proceeds shall form part of the gross estate because the beneficiary is the administrator of the estate. This is regardless of whether the

designation is revocable or irrevocable.3. Proceeds shall form part of the gross estate. Since the designation of the beneficiary is silent as to its revocability, it is presumed by law to be

revocable.4. Proceeds shall form part of the gross estate because the designation of the beneficiary is revocable.5. Proceeds shall not form part of the gross estate because the designation of the beneficiary is irrevocable.

ProblemClaims Valuation Situs of Property1. A 1. P3M 1. within 6. within 11. without 16. without 21. within 26. within2. B 2. P1.4M 2. within 7. without 12. within 17. within 22. within 27. within3. D 3. P272,000 3. within 8. within 13. within 18. within 23. within 28. without4. A 4. P80,000 4. within 9. without 14. without 19. within 24. without 29. within5. B 5. P550,000* 5. without 10. within 15. without 20. without 25. without6. D

* Paid-in capital (P4 x 800,000 shs) P3,200,000Retained earnings 1,200,000Stockholders’ equity P4,400,000Divide by outstanding shares 800,000Book value per share P 5.50Multiply by shares held 100,000Value to include in gross estate P 550,000

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Problema, b, and c. Gross estate = P31.2M (All items are added.)d. Gross estate = P10.025M (Consider items 4, 5, 7, 8, 9, 18, 19, 20 and 23.)e. Gross estate = P16.7M (Consider items 2, 4, 5, 7, 8, 9, 11, 14, 16, 17, 18, 19, 20, 21, 22 and 23.)

Problema, b, and c. Gross estate = P31.025M (All items are added.)d. Gross estate = P8.525M (Consider items 2, 3, 6, 7, 9, 10, 11, 19 and 21.)e. Gross estate = P18.725M (Consider items 2, 3, 6, 7, 8, 9, 10, 11, 13, 16, 18, 19, 20 and 21.)

Problema, b, and c. Gross estate = P26,987,500 (All items are added.)d. Gross estate = P7.65M (Consider items 3, 4, 5, 6, 8, 11 and 15.)e. Gross estate = P13.975M (Consider items 1, 3, 4, 5, 6, 8, 11, 13, 15, 16, 20, 21, 22, 23, 26, 28 and 29.)

Chapter 4True or False True or False1. T 6. T 11. F 1. T 6. T2. F 7. T 12. F 2. T 7. F3. T 8. F 13. T 3. F 8. T4. T 9. T 14. F 4. F 9. T5. F 10. T 15. F 5. T 10. F

Multiple Choice Multiple Choice Funeral ExpensesProblem 1 Problem 2

1. B 6. D 1. A 6. A 1. P50,000 Answer: P78,800*2. B 7. C 2. D 7. D 2. P100,0003. B 8. A 3. A 8. B 3. P175,0004. D 9. D 4. D 9. A 4. P175,0005. A 10. D 5. D 10. C 5. P200,000

* Embalming charges P 2,000Burial apparel of the decedent 2,200Cost of coffin 15,000Mourning apparel during burial of the surviving

spouse 1,500Mourning apparel one unmarried minor child 1,000Snacks and drinks during the wake 1,500Honoraria of priest for daily mass for three days;

P500 a day 1,500Telecommunication charges to inform relatives in

the provinces 200Charges for death notice published in a newspaper 700Cost of video footage of the burial and interment 2,100Funeral car service during interment 400Honorarium of priest who celebrated the mass

during interment 700Cost of tombstone 50,000

Total P78,800

Actual funeral expenses (as computed) P 78,8005% x P1,800,000 90,000Maximum limit 200,000Deduction allowed P78,800

Multiple Choice1. A 6. C 11. D 16. B 21. A 26. C2. B 7. C 12. C 17. A 22. D 27. D3. C 8. A 13. D 18. B 23. C 28. A4. C 9. B 14. C 19. B 24. B 29. D5. B 10. C 15. D 20. D 25. B 30. C31. B 36. B 41. B 46. C32. A 37. C 42. C 47. C33. C 38. C 43. B 48. C34. A 39. C 44. D 49. A35. C 40. B 45. C 50. A

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Problem 1 Problem 2

Real and personal properties P3,500,000 Real and personal properties P4,250,000Family Home 1,750,000 Family Home 1,500,000Gross Estate P5,250,000 Gross Estate P5,750,000Less: Deductions Less: DeductionsOrdinary Deductions Ordinary Deductions

Funeral Expenses P 200,000 Funeral Expenses P 200,000Other Deductions 1,250,000 P1,450,000 Other Deductions 950,000 P1,150,000

Special Deductions Special DeductionsFamily Home P1,000,000 Family Home P1,000,000Standard Deduction 1,000,000 Standard Deduction 1,000,000Medical Expenses 350,000 2,350,000 Medical Expenses 500,000 2,500,000

Total Deductions P3,800,000 Total Deductions P3,650,000Net Taxable Estate P1,450,000 Net Taxable Estate P2,100,000

Problem 3 Problem 4

Real and personal properties P3,750,000 Real and personal properties P2,800,000Family Home 900,000 Family Home 750,000Gross Estate P4,650,000 Gross Estate P3,550,000Less: Deductions Less: DeductionsOrdinary Deductions Ordinary Deductions

Funeral Expenses P 200,000 Funeral Expenses P 177,500Other Deductions 1,200,000 P1,400,000 Other Deductions 1,050,000 P1,227,500

Special Deductions Special DeductionsFamily Home P 900,000 Family Home P 750,000Standard Deduction 1,000,000 Standard Deduction 1,000,000Medical Expenses 200,000 2,100,000 Medical Expenses 400,000 2,150,000

Total Deductions P3,500,000 Total Deductions P3,377,500Net Taxable Estate P1,150,000 Net Taxable Estate P 172,500

Chapter 5Problem1. exempt 6. P59,000 11. P990,0002. P2,500 7. P99,000 12. P1,315,0003. P7,500 8. P190,000 13. P1,915,0004. P12,500 9. P410,000 14. P4,215,0005. P19,000 10. P690,000 15. P5,215,000

Chapter 6Problem 1

Gross estateParcel of land in California, U.S.A. P2,500,000House and lot in Quezon City (family

home) 2,250,000Shares of stock in a foreign corporation

with office in California, U.S.A. 1,125,000Car in California, U.S.A. 312,500Bank deposit 125,000Claim against an insolvent person 62,500 P6,375,000

Less: DeductionsFuneral expenses

Actual P312,5005% x P6,375,000 318,750Maximum limit 200,000Allowed P 200,000

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Medical expenses (maximum limit) 500,000Judicial expenses 43,750

Claims against the estate 90,625Claims against an insolvent person 62,500Family home 1,000,000Standard deduction 1,000,000 2,896,875

Net taxable estate P3,478,125

Estate taxOn P2,000,000 P135,000.00

1,478,125 x 11% 162,593.75P3,478,125 P297,594.00

Problem 2Gross estate

Fishpond in General Santos City P2,500,000Lot in Las Pinas City 625,000House and lot in San Juan, Metro Manila

(family home) 593,750Honda car 375,000Farm in Nueva Ecija donated mortis

causa to sister 262,500Time deposit 150,000 P4,506,250

Less: DeductionsMortgage on fishpond P 25,000Medical expenses incurred in 2012 287,500Unpaid real estate tax for the 4th quarter

of 2012 20,000Family home 593,750Standard deduction 1,000,000 1,926,250


Estate taxOn P2,000,000 P135,000

580,000 x 11% 63,800P2,580,000 P198,800

Problem 3Gross estate

Farm, Camarines Sur P4,375,000Bank deposit 2,125,000House and lot in Guadalupe, Makati City

(family home) 1,875,000Investment in a domestic partnership 1,500,000 P9,875,000


Actual P293,7505% x P9,875,000 493,750Maximum limit 200,000Allowed P 200,000

Medical expenses 237,500Standard deduction 1,000,000Family home 1,000,000 2,437,500


Estate tax

On P5,000,000 P465,0002,437,500 x 15% 365,625

P7,437,500 P830,625

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Problem 41. Gross estate

Cash in bank, Makati City P1,200,000Investment in a domestic partnership 1,000,000Car 700,000Foreign shares 700,000Domestic shares 500,000Accounts receivable 100,000 P4,200,000


Actual P150,0005% x P4,200,000 210,000Maximum limit 200,000Allowed P150,000

Judicial expenses 100,000Claim against an insolvent person 100,000Loss by robbery 3 months after death 200,000Unpaid income tax for 2011 160,000Legacy in favor of Philippine National

Red Cross 50,000Legacy to City of Makati 100,000Standard deduction 1,000,000 1,860,000


Estate tax

On P2,000,000 P135,000340,000 x 11% 37,400

P2,340,000 P172,400

2. Gross estateCash in bank, Makati City P1,200,000Investment in a domestic partnership 1,000,000Car 700,000Domestic shares 500,000 P3,400,000.00


Actual P150,0005% x P3,400,000 170,000Maximum limit 200,000Allowed P150,000

Judicial expenses 100,000Loss by robbery 3 months after death 200,000Unpaid income tax for 2011 160,000

P610,000

P3,400,000P4,200,000

x P610,000 P493,809.52

Legacy in favor of Philippine NationalRed Cross 50,000.00

Legacy to City of Makati 100,000.00 643,809.52Net taxable estate P2,756,190.48

Estate tax

On P2,000,000.00 P135,000.00756,190.48 x 11% 83,180.95

P2,756,190.48 P218,181.00

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3. Gross estate-Car P700,000Less: Deductions

Funeral expensesActual P150,000

5% x P700,000 35,000Maximum limit 200,000Allowed P 35,000

Judicial expenses 100,000Loss by robbery 3 months after death 200,000Unpaid income tax for 2011 160,000

P495,000

P 700,000P4,200,000

x P495,000 P 82,500

Legacy in favor of Philippine NationalRed Cross 50,000

Legacy to City of Makati 100,000 232,500Net taxable estate P467,500

Estate taxOn P200,000 Exempt

267,500 x 5% P13,375P467,500

Chapter 7True or False Multiple Choice1. T 6. T 1. B 6. D2. F 7. T 2. A 7. B3. T 8. F 3. A 8. D4. T 9. F 4. D 9. C5. F 10. F 5. C 10. C

Problem 1Exclusive Conjugal Total

Conjugal Properties:Apartment, 3 units 1,000,000Bank deposit 700,000Domestic shares 500,000Car 400,000 2,600,000

Exclusive Properties:Family home 1,250,000Vacant lot 300,000 1,550,000

Gross Estate 1,550,000 2,600,000 4,150,000(Less): Conjugal Deductions

Funeral expenses (90,000) (90,000)Unpaid mortgage on apartment (300,000) (300,000)Note payable (60,000) (60,000)

Exclusive DeductionsLegacy to Hospicio de San Jose (20,000) (20,000)

Net Estate After Deductions 1,530,000 2,150,000 3,680,000(Less):

Share of surviving spouse (1,075,000) (1,075,000)Family home (1,000,000) (1,000,000)Standard deduction (1,000,000) (1,000,000)

Net Taxable Estate 530,000 75,000 605,000

Estate Tax DueOn 500,000 15,000

105,000 at 8% 8,400605,000 23,400

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Conjugal Properties:Family home 1,350,000

Tobacco plantation 2,000,000Bank deposit, PDCP 650,000Personal property 300,000Notes receivable 200,000 4,500,000

Exclusive Properties:Family vacation house, Tagaytay 800,000Family lot 500,000 1,300,000

Gross Estate 1,300,000 4,500,000 5,800,000(Less): Conjugal Deductions

Funeral expenses (80,000) (80,000)Unpaid mortgage on plantation (200,000) (200,000)


Share of surviving spouse (2,110,000) (2,110,000)Family home (325,000) (675,000) (1,000,000)Standard deduction (1,000,000) (1,000,000)

Net Taxable Estate 975,000 435,000 1,410,000


910,000 at 8% 72,8001,410,000 87,800

Problem 3-1Exclusive Conjugal Total

Conjugal Properties:Personal property 1,300,000Apartment and lot 1,000,000 2,300,000

Exclusive Properties:Land 100,000Jeep 20,000San Miguel shares 300,000 420,000

Gross Estate 420,000 2,300,000 2,720,000(Less): Conjugal Deductions

Funeral expenses (50,000) (50,000)Unpaid mortgage on apartment & lot (70,000) (70,000)

Exclusive DeductionsVanishing deduction (Sch.) (30,588) (30,588)

Net Estate After Deductions 389,412 2,180,000 2,569,412(Less):

Share of surviving spouse (1,090,000) (1,090,000)Standard deduction (1,000,000) (1,000,000)


Schedule of Vanishing Deduction

Value takenLand 50,000Jeep 20,000 70,000

Less: Mortgage paid 30,000Initial basis 40,000

Less: 40,000 x 120,000 ** 1,7652,720,000 *

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Final Basis 38,235Multiply by rate 80%Vanishing deduction 30,588

* Gross estate

** Funeral expenses, Unpaid mortgage, apartment & lotProblem 3-2

Exclusive Conjugal TotalGross Estate 420,000 2,300,000 2,720,000(Less): Conjugal Deductions

Funeral expenses (50,000) (50,000)Unpaid mortgage on apartment & lot (70,000) (70,000)

Exclusive DeductionsUnpaid mortgage on land (10,000) (10,000)Vanishing deduction (Sch.) (38,088) (38,088)


Share of surviving spouse (1,090,000) (1,090,000)Standard deduction (1,000,000) (1,000,000)


Schedule of Vanishing Deduction

Value takenLand 50,000Jeep 20,000 70,000

Less: Mortgage paid 20,000Initial basis 50,000Less: 50,000 x 130,000 ** 2,390

2,720,000 *Final Basis 47,610Multiply by rate 80%Vanishing deduction 38,088

* Gross estate** Funeral expenses; Unpaid mortgage, apartment & lot, land


Conjugal Properties:House and lot (Family Home) 1,500,000Apartment 3,000,000Personal property 400,000 4,900,000

Exclusive Properties:Fishpond 500,000 500,000


Funeral expenses (120,000) (120,000)Unpaid mortgage on apartment & lot (500,000) (500,000)Claims against the estate (80,000) (80,000)

Exclusive DeductionsUnpaid mortgage on land (20,000) (20,000)Vanishing deduction (Sch.) (52,000) (52,000)


Share of surviving spouse (2,100,000) (2,100,000)Family home (750,000) (750,000)Standard deduction (1,000,000) (1,000,000)


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278,000 at 8% 22,240778,000 37,240

Schedule of Vanishing Deduction:

Value taken, Fishpond 140,000Less: Mortgage paid 40,000Initial basis 100,000

Less: 100,000 x 720,000 ** 13,3335,400,000 *

Final Basis 86,667Multiply by rate 60%Vanishing deduction 52,000

* Gross estate** Funeral expenses; Unpaid mortgage-apartment, fishpond; Claims against the estate

Problem 5Conjugal Gross Estate

House and lot (Family Home) 1,500,000Fishpond, Dagupan 1,200,000Domestic shares of stock 300,000Investment in a business partnership 250,000Time deposit 1,600,000 4,850,000

(Less): Conjugal DeductionsFuneral expenses (192,500)Unpaid mortgage on fishpond (350,000)Medical expenses (500,000) (1,042,500)

Net Estate After Deductions 3,807,500(Less):

Share of surviving spouse (1,903,750)Family home (750,000)Standard deduction (1,000,000) (3,653,750)

Net Taxable Estate 153,750

Estate Tax DueOn 153,750 Exempt


Conjugal Properties:House and lot (Family Home) 1,350,000Azucarera, Tarlac 1,800,000Investment in a domestic partnership 400,000Personal property 160,000Cash in bank 200,000 3,910,000

Exclusive Properties:Apartment, QC 700,000 700,000


Funeral expenses (130,000) (130,000)Unpaid mortgage, azucarera (140,000) (140,000)Income tax for 2011 (24,000) (24,000)Medical expenses for 2012 (75,000) (75,000)

Exclusive DeductionsMortgage on apartment (100,000) (100,000)

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195,500 at 8% 15,640695,500 30,640


Conjugal Properties:Real Properties 4,500,000 4,500,000

Exclusive Properties:Family Home 1,750,000Other Exclusive Properties 2,800,000 4,550,000

Gross Estate 4,550,000 4,500,000 9,050,000Less:Ordinary Deductions

Conjugal DeductionsFuneral expenses (200,000) (200,000)Other Deductions (1,600,000) (1,600,000)

Total Conjugal Deductions (1,800,000) (1,800,000)Net Conjugal Estate 2,700,000

Special DeductionsFamily Home (1,000,000)Standard Deduction (1,000,000)Medical Expenses (500,000)

Total Deductions (4,300,000)Net Estate 4,750,000Less: 1/2 Share of Surviving Spouse

Conjugal Property 4,500,000Conjugal Deduction (1,800,000)Net Conjugal Estate 2,700,000(P2,700,000/2) (1,350,000)

Net Taxable Estate 3,400,000

Notes:1. FH is the exclusive property of the decedent, hence, it does not form part of the conjugal gross estate.2. The estate is allowed to claim the maximum P1 million FH deduction under 'special deductions.'

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Conjugal Properties:Family Home 2,500,000Other Real Properties 3,800,000 6,300,000

Exclusive Properties: 2,200,000 2,200,000Gross Estate 2,200,000 6,300,000 8,500,000

Less:Ordinary Deductions



Special DeductionsFamily Home (1,000,000)Standard Deduction (1,000,000)Medical Expenses (480,000)





Conjugal Properties:Family Home 1,700,000Other Real Properties 7,000,000 8,700,000

Exclusive Properties: 2,500,000 2,500,000Gross Estate 2,500,000 8,700,000 11,200,000

Less:Ordinary Deductions



Special DeductionsFamily Home (850,000)Standard Deduction (1,000,000)Medical Expenses (500,000)




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Conjugal Properties:Other Real Properties 3,300,000Family Home 1,100,000 4,400,000

Exclusive Properties:Other Real Properties 2,200,000Family Lot 450,000 2,650,000

Gross Estate 2,650,000 4,400,000 7,050,000Less:Ordinary Deductions



Special DeductionsFamily Home

Exclusive Lot 450,000Conjugal Home

(P1,100,000/2) 550,000 (1,000,000)Standard Deduction (1,000,000)Medical Expenses (450,000)




Chapter 8True or False1. T 6. T2. T 7. T3. T 8. T4. T 9. T5. T 10. F

Problem 1 Exclusive Communal TotalCommunal Properties:

Lot w/ apartment, QC 1,800,000Lot w/ apartment, Makati 1,200,000 3,000,000

Exclusive Properties:Farm, Nueva Ecija 600,000 600,000

Gross Estate 600,000 3,000,000 3,600,000(Less): Communal Deductions

Funeral expenses (100,000) (100,000)Judicial expenses (200,000) (200,000)Accounst payable (70,000) (70,000)Fire loss (30,000) (30,000)

Exclusive DeductionsUnpaid mortgage on farm (150,000) (150,000)Legacy to Makati City (100,000) (100,000)

Net Estate After Deductions 350,000 2,600,000 2,950,000

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(Less):Share of surviving spouse (1,300,000) (1,300,000)Standard deduction (1,000,000) (1,000,000)

Net Taxable Estate 350,000 300,000 650,000Estate Tax Due

On 500,000 15,000150,000 at 8% 12,000650,000 27,000

Problem 2Exclusive Communal Total

Communal Properties:Family home 1,300,000Investment in a business partnership 2,000,000Fishpond 1,000,000Personal property 700,000 5,000,000

Exclusive Properties:Ranch 200,000 200,000

Gross Estate 200,000 5,000,000 5,200,000(Less): Communal Deductions

Funeral expenses (80,000) (80,000)Unpaid mortgage on fishpond (300,000) (300,000)Unpaid real property taxes (20,000) (20,000)

Exclusive DeductionsUnpaid mortgage on ranch (50,000) (50,000)





300,000 at 8% 24,000800,000 39,000


Communal Properties:Family home 3,000,000Inherited from father 1,200,000Owned by Mrs. Llovido before marriage 300,000 4,500,000

Exclusive Properties:Received as gift from mother 1,115,000Income from gift from mother 5,000 1,120,000

Gross Estate 1,120,000 4,500,000 5,620,000(Less): Communal Deductions

Funeral expenses (50,000) (50,000)Judicial expenses (100,000) (100,000)Medical expenses (70,000) (70,000)Obligations during marriage (150,000) (150,000)

Exclusive DeductionsIndebtedness before marriage (20,000) (20,000)



Net Taxable Estate 1,100,000 65,000 1,165,00013


665,000 at 8% 53,2001,165,000 68,200


Communal Properties:Family home acquired during marriage 4,000,000Owned by Mr. Castaneda before marriage 300,000

Owned by Mrs. Castaneda before marriage 200,000 4,500,000Exclusive Properties:

Inheritance 2,000,000 2,000,000Gross Estate 2,000,000 4,500,000 6,500,000(Less): Communal Deductions

Funeral expenses (200,000) (200,000)Judicial expenses (80,000) (80,000)Unpaid obligations (35,000) (35,000)

Exclusive DeductionsUnpaid mortgage on property inherited (200,000) (200,000)Vanishing deduction (Sch.) (736,615) (736,615)



Net Taxable Estate 1,063,385 92,500 1,155,885Estate Tax Due

On 500,000 15,000655,885 at 8% 52,471

1,155,885 67,471Schedule of Vanishing Deduction:Value taken, Property inherited 1,100,000Less: Mortgage paid 100,000Initial basis 1,000,000Less: 1,000,000 x 515,000 ** 79,231

6,500,000 *Final Basis 920,769Multiply by rate 80%Vanishing deduction 736,615

* Gross estate** Funeral expenses, Judicial expenses, Unpaid obligations, Unpaid mortgage on property inherited

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Chapter 9

Multiple Choice1. C 6. D 11. A2. C 7. C 12. D3. B 8. B 13. C4. D 9. A 14. C5. A 10. D

Problem 1

a. Philippine estate tax:

On P2,000,000 P135,000

Allowable tax credit:

Limitation 1USA

(P600,000/P2M x P135,000) P 40,500Actual 250,000Allowed P40,500

Singapore(P400,000/P2M x P135,000) P 27,000Actual 120,000Allowed 27,000

Total (Limitation 1) P67,500

Limitation 2(P1M/P2M x P135,000) P 67,500Actual (P250,000 + P120,000) 370,000Allowed P67,500

Tax credit to be deducted (either limitation) P67,500

b. Philippine estate tax still due:Philippine estate tax P135,000Less: Tax credit 67,500Estate tax still due P 67,500

Problem 2

1a. Philippine estate tax:

On P 500,000 P15,000700,000 x 8% 56,000

P1,200,000 P71,000

b. Allowable tax credit:

Limitation 1Indonesia

(P400,000M/1.2M x P71,000) P23,666.67Actual 10,000.00Allowed P10,000

Vietnam(P200,000/P1.2M x P71,000) P11,833.33Actual 2,000.00Allowed 2,000


Limitation 2(P600,000/P1.2M x P71,000) P35,500.00Actual (P10,000 + P2,000) 12,000.00Allowed P12,000

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c. Philippine estate tax still due:

Philippine estate tax ( computed in “a”) P71,000Less: Tax credit (computed in “b”) 12,000Estate tax still due P59,000

2a & c.On P500,000 P15,000

100,000 x 8% 8,000P600,000 P23,000

b. No allowable tax credit.

Chapter 10True or False Multiple Choice1. F 6. T 1. B 6. A, B2. T 7. T 2. C 7. D3. T 8. F 3. A 8. B4. T 9. T 4. B 9. B5. F 10. T 5. C 10. D

Chapter 11True or False Multiple Choice1. F 6. T 1. C 6. D2. T 7. T 2. A 7. D3. F 8. T 3. B 8. B4. T 9. T 4. D5. T 10. T 5. B

Chapter 12True or False Multiple Choice1. F 6. F 1. C2. T 7. T 2. B3. T 8. T 3. C4. T 9. F 4. D5. T 10. T 5. A

6. B

Chapter 13Multiple Choice: Problems1. C 6. D 11. D 16. B2. C 7. A 12. B 17. B3. B 8. A 13. D 18. D4. B 9. D 14. A 19. A5. D 10. A 15. C 20. B

21. B

Chapter 14Multiple Choice: Problems Multiple Choice1. D 6. C 11. C 16. C 21. D 1. C 6. C2. D 7. B 12. A 17. D 2. A 7. A3. D 8. C 13. D 18. B 3. C 8. C4. B 9. D 14. B 19. A 4. A 9. B5. P90,000 10. A 15. A 20. C 5. A 10. C

11. D

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For nos. 6-21, please see computation below.Mrs. Herrera

1. Donor’s tax to be based on the table for donations to non-strangers.

Gross gift, June 13, To Lance P700,000Less: Exemption 300,000Net gift P400,000Add: Prior net gift

Gross gift, Jan. 25, To Leonard P400,000Less: Exemption 10,000 390,000

Aggregate net gift P790,000Donor’s tax, total net gift

On P500,000 P14,000290,000 x 6% 17,400 P31,400

P790,000Less: Tax on prior net gift

On P200,000 P2,000190,000 x 4% 7,600 9,600

P390,000Donor’s tax still due P21,800

2. 30% Donor’s tax for donations to strangers.

Gross gift, Dec. 25, To Patty P430,000Less: Exemption 30,000Net gift P400,000Add: Prior net gift

Gross gift, Jan. 25, To Pam P400,000Less: Exemption 0Net gift P400,000

Gross gift, Apr. 8, To IBP P400,000Less: Exemption 400,000Net gift 0

Gross gift, May. 13, To Cavite Prov. P2,000,000Less: Exemption 2,000,000Net gift 0 400,000

Total net gift P800,000Multiply by: 30%Donor’s tax on total net gift P240,000Less: Donor’s tax on all prior net gift

(Jan. 25, P400,000 x 30%) 120,000Donor’s tax due P 120,000

Mr. Herrera

1. Donor’s tax to be based on the table for donations to non-strangers.

Gross gift, Dec. 25, To Patty P430,000Less: Exemption 30,000Net gift P400,000Add: Prior net gift

Gross gift, Jan. 25, To Leonard P400,000Less: Exemption 10,000 390,000

Aggregate net gift P790,000Donor’s tax, total net gift

On P500,000 P14,000290,000 x 6% 17,400 P31,400

P790,000

Less: Tax on prior net gift

On P200,000 P2,000190,000 x 4% 7,600 9,600

P390,000Donor’s tax still due P21,800

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2. 30% Donor’s tax for donations to strangers.Gross gift, June 13, To Lance P700,000Less: Exemption 300,000Net gift P400,000Add: Prior net gift

Gross gift, Jan. 25, To Pam P400,000Less: Exemption 0Net gift P400,000

Gross gift, Apr. 8, To IBP P400,000Less: Exemption 400,000

Net gift 0

Gross gift, May. 13, To Cavite Prov. P2,000,000Less: Exemption 2,000,000Net gift 0 400,000

Total net gift P800,000Multiply by: 30%Donor’s tax on total net gift P240,000Less: Donor’s tax on all prior net gift

(Dec. 25, P400,000 x 30%) 120,000Donor’s tax due P120,000

Chapter 15

Problem 1a. Philippine donor’s tax:

On P2,000,000 P135,000

Allowable tax credit:

Limitation 1Netherlands

(P600,000/P2M x P135,000) P 40,500Actual 250,000Allowed P40,500

Venezuela(P400,000/P2M x P135,000) P 27,000Actual 120,000Allowed 27,000


Limitation 2(P1M/P2M x P135,000) P 67,500Actual (P250,000 + P120,000) 370,000Allowed P67,500


b. Philippine donor’s tax still due:Philippine donor’s tax P135,000Less: Tax credit 67,500Donor’s tax still due P 67,500

Problem 2

1a. Philippine donor’s tax:

On P 500,000 P15,000700,000 x 8% 56,000

P1,200,000 P71,000

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b. Allowable tax credit:

Limitation 1Cambodia

(P400,000M/1.2M x P71,000) P23,666.67Actual 10,000.00Allowed P10,000

Aruba(P200,000/P1.2M x P71,000) P11,833.33Actual 2,000.00Allowed 2,000


Limitation 2

(P600,000/P1.2M x P71,000) P35,500.00Actual (P10,000 + P2,000) 12,000.00Allowed P12,000


c. Philippine donor’s tax still due:

Philippine donor’s tax ( computed in “a”) P71,000Less: Tax credit (computed in “b”) 12,000Donor’s tax still due P59,000

2a & c.On P500,000 P15,000

100,000 x 8% 8,000P600,000 P23,000

b. No allowable tax credit.

Chapter 17True or False Multiple Choice1. T 6. T 1. C2. T 7. T 2. B3. F 8. T 3. C4. T 9. T 4. A5. T 10. F 5. A

ProblemsSuysan Realty – next page please.

1. P18,0002. P250,000 x 12% = P30,000

P125,000 x 12% = P15,000P100,000 x 12% = P12,000P25,000 x 12% = P3,000Not coveredP50,000 x 12% = P6,000P50,000 x 12% = P6,000

Total Output Tax = P72,0003. P2,525,000 x 12/112 = P270,535.71 (a)

P1,701,080 x 12% = P204,129.60 (b)P270,000 x 12% = P32,400 (c)VAT Due = ((a) + (c)) – ((b) + P18,500) = P80,306.11

Problem 1: Sales Scheme: no reservation, 10/40/50 GivenSelling Price per Contract (excluding VAT), Jan. 5, 2012 3,199,200 GivenDownpayment, Jan. 15, 2012 319,920 10%Balance 2,879,280 90%Balance to be paid as follows:

40% in equal monthly amortizations 1,279,680 40%50% upon turnover 1,599,600 50%

2,879,280 90%

19

Zonal Value 2,800,000 Given

Term (in months) 36 GivenMonthly Amortization 35,546.67Total Monthly Amortizations (Jan. 31 to Dec. 31, 2012) 426,560.00 12

Initial Payments (DP and MA during the year) 746,480.00Divided by: GSP (see if fair value is lower) 3,199,200.00Test (whether sale is on installment or on deferred-payment) 23.33% did not exceed 25%

What will be the basis of VAT? selling price per contractHow much is the downpayment before VAT? 319,920.00What is the amount to be paid (ex-VAT) before turnover? 1,599,600.00How much will the monthly amortization (ex-VAT) be? 35,546.67What is the total amortizations (VAT inclusive) during the year of sale? 477,747.20

What is the initial payments? 746,480.00Is this sale on installment or on deferred-payment basis? on installmentHow much is the output tax related to the event on Jan. 15, 2012? 38,390.40How much is the output tax related to the event on Jan. 31, 2012? 4,265.60How much is the total output tax related to this sale for 2012? 89,577.60

Problem 2: Sales Scheme: no reservation, 10/50/40 GivenSelling Price per Contract (excluding VAT), Jan. 5, 2012 2,700,000 GivenDownpayment, Jan. 15, 2012 270,000 10%Balance 2,430,000 90%Balance to be paid as follows:

50% in equal monthly amortizations 1,350,000 50%40% upon turnover 1,080,000 40%

2,430,000 90%

Zonal Value 2,525,000 Given

Term (in months) 36 GivenMonthly Amortization 37,500.00Total Monthly Amortizations (Jan. 31 to Dec. 31, 2012) 450,000.00 12

Initial Payments (DP and MA during the year) 720,000.00Divided by: GSP (see if fair value is lower) 2,700,000.00Test (whether sale is on installment or on deferred-payment) 26.67% exceeded 25%

What will be the basis of VAT? selling price per contractHow much is the downpayment before VAT? 270,000.00What is the amount to be paid (ex-VAT) before turnover? 1,080,000.00How much will the monthly amortization (ex-VAT) be? 37,500.00What is the total amortizations (VAT inclusive) during the year of sale? 504,000.00What is the initial payments? 720,000.00Is this sale on installment or on deferred-payment basis? on deferred-paymentHow much is the output tax related to the event on Jan. 2012? 324,000.00How much is the output tax related to the event on Feb. 28, 2012? zero

Chapter 18Multiple Choice1. B2. A3. D4. D5. C

20

Chapter 20Multiple Choice1. B 6. D2. B 7. C3. D4. C5. A

Chapter 23Multiple ChoiceTheory Multiple Choice1. B 1. A 6. B 11. D 1. B 6. D 11. B2. B 2. D 7. D 12. C 2. D 7. C 12. D

3. B 3. C 8. D 13. B 3. B 8. C 13. A4. B 4. A 9. D 14. B 4. C 9. D5. C 5. B 10. D 15. C 5. B 10. D

Multiple Choice Multiple ChoiceProblem Problem1. B 6. B 11. C 16. D 1. A 6. C2. A 7. A 12. D 17. B 2. B3. D 8. B 13. A 3. B4. B 9. B 14. B 4. D5. C 10. C 15. A 5. C

SGB CorporationTotal amount per invoice P530,000 Local purchases-

goods P270,000Add: Deemed sales-goods taken for personal use

12,000* Local purchases-services 50,000Gross taxable sales/receipts P542,000

Total amount per invoice/receipt P320,000Deduct: Allowable sales returns & allow. 17,000 Less: Allowable purchase ret. & allow. 7,500Net taxable sales/receipts P525,000 Net purchases P312,500Multiply by 12% Multiply by 12%Output tax P 63,000 Input Tax P 37,500

Advance VAT

a) Invoice value (peso)* P 905,000 (1) a) Invoice value P800,000 (1)

b) Customs duties & othercharges except VAT 200,000 b) Estimated freight expenses 18,000

c) 5% Mark-up (a + b) c) 5% Mark-up (a + b)5% (905,000 + 200,000) 55,250 (2) 5% (800,000 + 18,000) 40,900 (2)

Total (a + b + c) P 1,160, 250 Total (a + b + c) P858,900Multiply by 75% Multiply by 75%Tax base P870,187.50 (3) Tax base P644,175 (3)

Multiply by VAT rate 12% Multiply by VAT rate 12%Advance VAT P104,422.50 (4) Advance VAT P 77,301 (4)

*US$20,000 x P45.25 = 905,000

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Multiple ChoiceProblem1. B 6. B 11. C 16. D 21. B 26. A2. C 7. B 12. C 17. A 22. C 27. A3. D 8. C 13. D 18. A 23. C 28. D4. D 9. B 14. C 19. D 24. D 29. D5. D 10. D 15. B 20. B 25. D 30. A

TaxpayerSalesPrice

ValueAdded

OutputTax

InputTax

VATPayable

Concessionaire 100 100 10 0 10Manufacturer 250 150 25 10 15Wholesaler 450 200 45 25 20Retailer 700 250 70 45 25Household (Purchase Price) 700 70

= P770

x Amount of input tax


Multiple Choice Multiple Choice Multiple ChoiceProblem Problem Problem Problem1. A 6. D 1. A 6. A 1. B 1. B2. D 7. B 2. A 7. D 2. B 2. A3. D 8. B 3. B 3. A 3. C4. B 9. A 4. A 4. B * 4. C5. D 10. A 5. C 5. A 5. A

11. Any answer is acceptable. 6. D

*2012 = P11,832 (394,400 x 3%). Note that the receipts of P350,000 is below the newthreshold of P394,400 (which is P98,600 per cab per quarter).

Mr. A – Customs Broker

Output Tax Due (P1,000,000 x 12%) P120,000.00 (1)

Less: Input Taxes(a) Directly Attributable

(1) Purchase of supplies P200,000(2) Freight services 80,000Total Purchases P280,000Multiply by VAT rate 12% (33,600.00) (2)

(b) Purchase of service common to both theactivity subject to VAT and theactivity not subject to VAT – P300,000(Rental of office space)Rule on Apportionment:

P1,000,000/P1,600,000* x P300,000P1,000,000 VAT sale

600,000 Non-VAT saleP1,600,000 *Total Sales

P187,500x 12% (22,500.00) (2)

Net VAT Payable P 63,900.00 (3)

Problem1. 20,000 4. 7,000 7. 18,0002. 10,000 5. 9,000 8. 5,0003. 8,000 6. 0 9. 8,000

Q4: Input tax attributable to VAT-exempt sales for the month-

Input tax on VAT-exempt sales - P2,000Ratable portion of the input tax not

directly attributable to any activity:

VAT-exempt sales Total Sales not directly attributable

P100,000 400,000

x P20,000 - P5,000

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Total input tax attributable to - P7,000 VAT-exempt sales

Q5: Input tax attributable to sales to government for the month-

Input tax on sale to government - P4,000Ratable portion of the input tax not


Taxable sales to government Total Sales not directly attributable


P100,000 400,000

Total input tax attributable to sales

x P20,000 - P5,000

- P9,000

to government

Q7: Creditable input tax for the month-

Input tax on sale subject to 12% - P 5,000Input tax on zero-rated sales - 3,000Ratable portion of the input tax not


Taxable sales (0% and 12%) Total Sales not directly attributable

P200,000 400,000 x P20,000 - P10,000

Total creditable input tax for the month - P18,000

The table below shows a summary of the foregoing transactions of DBA Corporation:

OutputVAT

Input VATdirectly

attributable

Input VAT notdirectly

attributable to

TotalInputVAT

CreditableInputVAT

Net VATPayable

ExcessInput

VAT for

InputVAT forrefund

Unrecover-able Input

VATany activity carry-over

Sale subject to 12%VAT 12,000 5,000 5,000 10,000 (Q2) 10,000 (Q7) 2,000 0 0 0

Sale subject to 0% VAT

Sale of Exempt Goods

Sale to Govt. subject to5% FinalWithholding VAT

0 3,000 5,000 8,000 (Q3) 8,000 (Q7) 0 0 8,000 (Q9) 00 2,000 5,000 7,000 (Q4) 0 (Q6) 0 0 0 7,000*

12,000 4,000 5,000 9,000 (Q5) 7,000** 5,000♦ (Q8) 0 0 2,000*

20,000 (Q1)

* These amounts are not available for input tax credit but may be recognized as cost or expense.**Standard input VAT of 7% on sales to Government as provided in Sec. 4.114-2(a).♦ Withheld by Government entity as Final Withholding VAT.

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Chapter 24 Chapter 25Problem Multiple Choice: Problem1. A (50,000 x 5%) 6. D 1. C 1. A 6. C2. D (50,000 x 7%) 7. C 2. A 2. D 7. B3. C (2,500 + 3,500) 8. A 3. D* 3. C4. A 9. C 4. A 4. B5. D 10. B 5. A 5. C

*15 x 21,900 x 3%

For nos. 8-10, please see computation below.Note: In 2010, upon pretermination, the loan agreement shall be

reclassified and the correct gross receipt tax, including prior years,For nos. 4-6, please see computation below. shall be recomputed on the basis of the new category as shown

hereunder:Gross

Interest Income with Maturity of Lessthan Five Years P100,000 Year

RemainingMaturity

Amount ofInterest, etc.

ApplicableTax Rate

ReceiptsTax

Multiply by GRT Rate 5% P5,000 (4) 2008 4 P100,000 5% P5,000Rentals P50,000 2009 3 100,000 5% 5,000

Multiply by GRT Rate 7% 3,500 (5) 2010 2 100,000 5% 5,000

Net Trading Gain for April 2012 P20,000 2011 1 100,000 5% 5,000Less than 1

Less: Net Trading Loss for March 2012 (10,000) 2012 year 100,000 5% 5,000Adjusted Net Trading Gain P10,000 P25,000

Multiply by GRT Rate 7% 700

Total P9,200 (6) Total Gross Receipts Tax P25,000 (8)

Less: GRT Previously Paid 9,000 (9)

GRT Due as Recomputed P16,000 (10)

Biyahe Pilipinas Bus

1. P1,500,000 x 3% = P45,0002. P750,000 x 12% = P90,000

P250,000 x 12% = P30,000Total VAT = P120,000

MVP Company

3. VAT = 9M x 12% = P1,080,0004. VAT = 9M x 12% = P1,080,0005. % Tax = 9M x 3% = P270,0006. VAT = 9M x 12% = P1,080,0007. % Tax = 9M x 2% = P180,0008. VAT = 8.65M x 12% = P1,038,000

% Tax = .35M x 10% = P35,000

UIOGD-AMDG

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Professor’s Notes:

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Documents

Transfer and Business Tax 2014- Ballada