7/31/2019 Bus&Trans Tax ~ Valencia, 5th Ed, Chapter 1 - Intro to Irt

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BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS)SUGGESTED ANSWERS

Chapter 1: INTRODUCTION TOINTERNAL REVENUE TAXES

CHAPTER 1

INTRO. TO INTERNAL REVENUE TAXES

Problem 1-11. True as to the object of tax

2. True as a general rule, except if the merchandise is sold outside the Philippines notsubject to business tax in the Philippines. If the resident Filipino citizen is within thesubsistence livelihood earnings, tax-exempt.

3. False business tax is another Internal Revenue Tax distinct from income tax.4. True5. False it is the other way around.6. True7. True

8. True9. True10. False citizens, resident or nonresident are subject to transfer tax for transfers within..

11. False on the 20th of the month following the taxable month.12. True13. False only income earned within will be taxable against resident alien14. False should be at least P1,000,000 per year.

Problem 1-2 Problem 1-31. A 1. D2. A 2. A3. C 3. C4. B 4. A5. A 5. C6. B 6. A

7. A 7. D8. D 8. A9. C 9. C10. A 10. C11. D 11. D12. A 12. D13. C 13. A

Problem 14

1. ASubject to business tax is P6,000,000. Only sales within are subject to business tax.

Subject to income tax:

Total sales (P6,000,000 + P4,000,000) P10,000,000Total cost of sales (P2,000,000 + P1,500,000) ( 3,500,000)Gross income P 6,500,000

Subject to transfer tax (P3,000,000 + P2,000,000) P 5,000,000

Since the donor is a citizen, all of his properties donated within and without is subject todonors tax.

2. B

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7/31/2019 Bus&Trans Tax ~ Valencia, 5th Ed, Chapter 1 - Intro to Irt

2/2

BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS)SUGGESTED ANSWERS

Chapter 1: INTRODUCTION TOINTERNAL REVENUE TAXES

Subject to business tax is P6,000,000. Only sales within are subject to business tax.

Subject to income tax:Sales within P6,000,000Cost of sales within (2,000,000)Gross income P4,000,000

Subject to transfer tax (P3,000,000 + P2,000,000) P5,000,000

Since the donor is a citizen, all of his properties donated within and without is subject todonors tax.

Problem 151. B 6. B2. O 7. B

3. O 8. O4. O 9. T5. O 10. T

Problem 16Taxable Amount

Within Without Res. Citizen Res. Alien Non-Res.Alien

Sales 3,000,000 2,000,000 3,000,000 3,000,000 3,000,000Gross income 600,000 400,000 1,000,000 600,000 600,000

1. Taxpayer is a resident citizena. P1,000,000 = [P5,000,000 (P5,000,000/1.25)]b. P3,000,000

2. Taxpayer is a resident aliena. P600,000 = [P3,000,000 (P3,000,000/1.25)]b. P3,000,000

3. Taxpayer is nonresident aliena. P600,000 = [P3,000,000 (P3,000,000/1.25)]b. P3,000,000

Problem 17

1. P720,000 = (P600,000 x 1.2)

2. P180,000 = (P720,000 P600,000) + (P660,000 P600,000)

Problem 181. Tax returns:

a. BIR Form 2551 for business taxb. BIR Form 1701Q for quarterly income tax returnc. BIR Form 1701 for annual income tax return

2. Dates of filing and payments:

a. On or before the 20th of each month (BIR Form 2551)b. April 15, August 15, and November 15 for the first 3 quarters and April 15 of the

following year for the annual tax return

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