Income Tax on Special Corporations  Read and analyze the following scenarios and apply the principles and concept of income taxation on special corporations.   Pioneer College, a private educational institution, has presented the following data for the year:   Gross Income, related activities P5,000,000 Gross Income, unrelated activities (except rental income) 5,000,000 Rental income (gross of 5% WT) 2,000,000 Expenses, related activities 2,000,000 Expenses, unrelated activities 3,000,000 Dividend income from a domestic corporation 100,000 Quarterly income tax paid for the first three quarters 500,000 Compute the income tax payable.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Income Tax on Special Corporations 

Read and analyze the following scenarios and apply the principles and concept of income taxation on special corporations.

 

  1. Pioneer College, a private educational institution, has presented the following data for the year:

 

Gross Income, related activities

P5,000,000

Gross Income, unrelated activities (except rental income)

5,000,000

Rental income (gross of 5% WT)

2,000,000

Expenses, related activities

2,000,000

Expenses, unrelated activities

3,000,000

Dividend income from a domestic corporation

100,000

Quarterly income tax paid for the first three quarters

500,000

Compute the income tax payable.

 

  1. Advanced Learning Institute, an educational institution, provided the following data for the current taxable year:

Income from tuition fees

P 3,500,000

School Miscellaneous Fees

1,500,000

Dividend Income:

 

Domestic Corporation

2,000,000

Foreign Corporation

2,000,000

Rent Income (Net of 5% withholding tax)

1,900,000

Operating Expenses

4,000,000

 

Compute the tax payable of the school.

 

  1. Norte De University, a proprietary educational institution, has the following selected information for the taxable year 2X18:

 

Tuition Fees

P 12,800,000

Miscellaneous Fees

1,800,000

Interest on Bank Deposits

12,300

Rent Income

350,000

Salaries and Bonuses, all personnel

7,500,000

Other Operating Expenses

3,500,000

Quarterly Income Tax Payments

48,000

 

An additional school building was built and finished on April 1, 2X18 at the cost of P2,000,000 with a depreciable life of 50 years.

  1. Compute the income tax payable assuming the university opted to claim the cost of construction as an outright
  2. Compute the income tax payable assuming the university opted to capitalize the cost of building

 

  1. A non-profit domestic hospital has the following data during the year 2x18:

 

Gross income from hospital operation

P2,000,000

Operating Expenses (excluding depreciation for the new hospital building)

500,000

Rent income of commercial space, hospital ground floor, net of 5% withholding taxes

190,000

Interest on bank deposit, net of 20% withholding tax

40,000

Dividend income from a domestic corporation

100,000

 

An additional hospital building was built and finished on June 30, 2X18 at the cost of P4,000,000 with a depreciable life of 25 years.

  1. Compute the income tax still due and payable in
  2. Assume the hospital was organized for profit, compute the income tax still due and payable in

 

  1. Pacific Airlines, an international carrier, showed the following gross receipts for 2X18:

 

Point of Origin

Destination

Gross Receipts

Philippines

United States of America

P 8,000,000

United States of America

United Kingdom

4,000,000

United States of America

Philippines

3,750,000

United Kingdom

Philippines

2,100,000

 

Additional information:

  • Forty percent (40%) of the shipments from the Philippines to the United States were later shipped to the United
  • Twenty-five percent (25%) of all its revenues were from the transport of cargoes and

 

Compute the income tax payable for 2X18.

 

  1. China Airlines , a resident foreign corporation, has the following data for the taxable year 2x18:

 

Passengers airfare from China to the Philippines

P 1,800,000

Passengers airfare from the Philippines to China

1,500,000

Airfare for cargoes from China to the Philippines

700,000

Airfare for cargoes from the Philippines to China

1,300,000

 

Compute the income tax payable.

 

  1. Y Corporation, a family-closed corporation, had the following selected data for 201A, the accumulated earnings for which year the BIR considered to be improper:

 

Non-taxable gain on life insurance of Y Co.’s president

P900,000

Income tax due 201A

780,000

Quarterly income tax paid

580,000

Dividend declared and paid during the year

440,000

Reserve for maturing bonds in 201B

300,000

Tax-exempt dividend income from resident corporation

200,000

Net-operating loss carry-over (NOLCO) deducted

100,000

Capital gain on direct sale to the buyer of shares of another domestic corporation, net of final tax

85,000

Interest income on peso deposit, net of final tax

16,000

 

Compute the amount of improperly accumulated earnings tax (IAET).

 

  1. A closely-held corporation, deemed committed unreasonably accumulating its income, shows the following data:

 

Paid-up capital

P 10,000,000

Accumulated Earnings – unrestricted

8,000,000

Accumulated Earnings – restricted

2,000,000

Income tax per annual income tax return

300,000

Income tax for the first three quarters

240,000

Final tax on passive income at 20%

60,000

Capital gains tax at 15%

45,000

 

Compute the amount of improperly accumulated earnings tax (IAET).

 

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