Taxation Straight Problem No. 2: On The Wings of Love

Marami na ang natuwa, kinilig, at tumili sa happy ending ng On The Wings of Love. Satisfied ba kayo sa ending ng OTWOL? For me, medyo hindi pa. Bakit?

Ganito ang puwede nating isingit sa ending ng On The Wings of Love. Sina Clark at Leah ay mag-asawa na. Natupad na nga ang kanilang happy ending. They lived happily ever after. Pagkatapos nilang magpakasal, naging stable na ang work nilang dalawa. Of course, kahit kasal na, may feelings pa rin si Simon kay Leah. (Hirap makamove-on, ano?) By the way, dalawa na ang anak nilang mag-asawa. (Tuwang-tuwa na si Tatang Sol dahil diyan. 🙂 )

Akala mo, tapos na iyon? Hindi pa. Kasi, may isang problema sila. Kailangan nilang magbayad ng income tax. Mas lalong problemado si Leah, at tinatanong sa iyo, “Magkano ang dapat naming bayaran sa BIR?” Solve their problem using all the concepts that you learned in Taxation.

Leah now showed you her statement of income and expenses as follows:

Compensation Income, net of withholding tax of 112,000

438,000

13th Month Pay

75,000

Rent Income from some units of Tenement Uno, owned jointly by Clark and Leah, net of 5% withholding tax

152,000

Interest income from their joint account

78,000

Fringe Benefits furnished by Simon for convenience of Leah as manager of Advertising Department

25,500

Condominium unit leased by Simon for Leah’s use

1,225,000

Allowances given by Simon, not subject to liquidation

44,000

Royalties from her book entitled, “With Love, Clark”

2,150,000

Professional Fee received by Leah, net of 15% withholding tax

782,000

Total Expenses

277,000

Meanwhile, Clark showed you his statement of his income and expenses as follows:

Compensation Income, net of withholding tax of 225,000

675,000

Business Income managed by the couple

552,000

Interest income on long-term deposit, invested for 4 ½ years, pre-terminated by Clark for wedding expenses

125,000

Prize received by Clark for joining Mr. Tenement Uno

15,000

Motor vehicle for Clark’s use, registered in the name of Pachang’s Woodland Corporation

1,562,000

Allowances given by Tita Jack to manage the company, subject to liquidation

20,000

Dividends received as stockholder of Pachang’s Woodland Corporation

46,000

Total Expenses

245,000

In addition, they have the following dependents:

  1. Clarkee, their eldest child, reached the age of 21 on February 26, 2016
  2. Clark Jr., their youngest child, gainfully employed during the year at age 19.
  3. Baste, Leah’s niece, 7 years old.
  4. Jigs, Clark’s cousin, 18 years old, married to Angela.

Leah had paid PHP2,280.00 as premiums on health and hospitalization insurance.

Requirements:

  1. Determine the following taxes payable by Clark and Leah. Show supporting computations for the following (Assume these are to be paid for taxable year 2016):
    1. Income Tax Still Due
    2. Fringe Benefit Tax
    3. Final Tax on Passive Income
  2. Same question, this time, using manual or electronic BIR Forms.

Taxation problem prepared by: TweetNewscaster.


Featured Image Credit: Nadine Lustre as Leah.

 

 

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