To operate a business, a taxpayer generally chooses between individual trading, partnership , and corporation form of entity. The corporations can be of either S Corporation or C Corporation. The taxpayer needs to understand his business requirements properly for the smooth continuance of his business since each form of entity has different tax treatment. After 2018, a new 21 percent rate of tax was introduced for corporations. Corporations must include in ordinary taxable income all net capital gains income during the year for tax purposes and then the income taxed at a regular rate except in certain rare circumstances. The amount of refund expected from the 2019 tax return of C Corporation.

Question

X Corporation, registered under PEZA, enjoying 5% preferential tax rate. In 2019, X’s sales totaled 2,000,000 and cost of sale is 500,000. Operating expenses is 300,000. This was the result of registered activities of X Corporation in 2019. What is the income tax payable to BIR?

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Chapter 11, Problem 15P

To determine

Introduction: To operate a business, a taxpayer generally chooses between individual trading, partnership, and corporation form of entity. The corporations can be of either S Corporation or C Corporation. The taxpayer needs to understand his business requirements properly for the smooth continuance of his business since each form of entity has different tax treatment. After 2018, a new 21 percent rate of tax was introduced for corporations. Corporations must include in ordinary taxable income all net capital gains income during the year for tax purposes and then the income taxed at a regular rate except in certain rare circumstances.

The amount of refund expected from the 2019 tax return of C Corporation.

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X Corporation, registered under PEZA, enjoying 5% preferential tax rate. In 2019, X’s sales totaled 2,000,000 and cost of sale is 500,000. Operating expenses is 300,000. This was the result of registered activities of X Corporation in 2019. What is the income tax payable to BIR?

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