Download Business and Transfer Tax 3rd Ed - TABAG and GARCIA.doc PDF

TitleBusiness and Transfer Tax 3rd Ed - TABAG and GARCIA.doc
TagsLoans Taxes Expense Estate Tax In The United States Tax Deduction
File Size293.5 KB
Total Pages38
Document Text Contents
Page 2

13. D 28. D 43. B 58. C
14. A 29. B 44. C 59. C
15. C 30. D 45. B 60. A

Supporting Computations:
23.

Bank deposit in the foreign branch of a domestic bank P500,000
Bank deposit in Makati branch of a foreign bank 300,000
Shares of stock issued by a domestic corporation
(certificate kept in Canada)

1,000,000

Franchise exercised in Manila 800,000
Receivable, debtor from Mindanao 200,000
Total Exclusion from the gross estate P2,800,000

23.
House and lot, family home in Quezon City P1,500,000
Bank deposit in Makati branch of a foreign bank 300,000
Shares of stock issued by a domestic corporation
(certificate kept in Canada)

1,000,000

Franchise exercised in Manila 800,000
Receivable, debtor from Mindanao 200,000
Total Inclusion from the gross estate P3,800,000

25.
Shares of stocks, domestic corp.
(certificate kept in UK)

P250,000

Shares of stocks, domestic corp.
(certificate kept in Phils.)

100,000

Franchise exercised in the Phils. 200,000
Receivables, debtor is from Phils. 50,000
Intangibles subject to reciprocity P600,000

26.
Land & building, Philippines P2,000,000
House and lot, Philippines 3,500,000
Shares of stocks, domestic corp. (certificate kept in UK) 250,000
Shares of stocks, domestic corp. (certificate kept in Phils.) 100,000
Franchise exercised in the Phils. 200,000
Receivables, debtor is from Phils. 50,000
Gross Estate P6,100,000

33. (P12M/100,000) x 1,000 shares = P120,000
34. (P10M/100,000) x 1,000 shares = P100,000
35. P110 x 1,000 shares = P120,000
36. (P140 + P80/2) x 1,000 shares = P110,000
44.

Consideration
received

FMV upon
transfer

FMV upon
death

Gross Estate

Land P1,500,000 P1,500,000 P2,000,000 None. Valid sale
Shares of stock 100,000 50,000 150,000 None. Valid sale
Vintage car 50,000 80,000 100,000 P50,000
Painting 250,000 400,000 500,000 250,000

2 | T r a n s f e r & B u s i n e s s T a x a t i o n ( 3 r d E d i t i o n ) b y T a b a g a n d G a r c i a

Page 37

 Expenses on demurrage fees (250,000)
Income subject to NCIT 750,000
NCIT rate 30% 225,000

Total income tax due P545,000

3) Business tax due = 3% CCT on cargo operations originating in the Philippines
= 3% x P6M = P180,000

4) Income tax due = P3,225,000
 An offline carrier is not an international carrier. Assume therefore that the income provided

were in the nature of commission income from international carriers.
 ***An offline carrier may be a domestic or resident foreign corporation. Since the original

problem pertains to an international carrier (resident foreign corporation), the offline carrier
provided in the problem should be treated as a resident foreign corporation taxable only on
its income from sources within the Philippines.

Solution:
Net income subject to NCIT:
 GR Passenger operations-Phils. P10,000,000
 GR cargo operations-Phils. 6,000,000
 Demurrage, detention and Other fees 1,000,000
 Expenses-passenger operations-Phils. (4,000,000)
 Expenses-cargo operations-Phils. (2,000,000)
 Expenses on demurrage fees (250,000) P10,750,000***
NCIT rate 30%
Income tax due P3,225,000

5) Business tax due (offline carrier) = P2,040,000
 GR from Passenger operations-Phils. P10,000,000
 GR from cargo operations-Phils. 6,000,000
 Demurrage, detention and Other fees 1,000,000 P17,000,000
Vat rate 12%
Business tax due P2,040,000

Problem IV:
1. P0. Not subject to business tax but subject to a capital gains tax of P2,500.

[(5,000 sh. X P50) – P200,000 = P50,000 capital gain x 5%CGT = P2,500 CGT

2. P0. Not subject to business tax as well as income tax (CGT). The transaction resulted to a loss
amounting to P75,000, hence, not subject to CGT.
Purchase Price = P50/share; S.P.=P35/share; Loss = P15/share


3. Subject to P6,000 value added tax
[(5,000 sh. X P50) – P200,000 = P50,000 capital gain x 12% = P6,000

4. Subject to OPT (stock transaction tax) of P600 computed as follows:
P120,000 x .005 = P600

5. OPT = 5,000 shares x P18 x .005 = P450

37 | T r a n s f e r & B u s i n e s s T a x a t i o n ( 3 r d E d i t i o n ) b y T a b a g a n d G a r c i a

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