ITEMIZED DEDUCTIONS AND OPTIONAL STANDARD
ITEMIZED DEDUCTIONS
AND OPTIONAL
STANDARD DEDUCTIONS
Problem 07. A Married individual with three (3) dependent children has the following business data in the Philippines for the current taxable year 2013.
Gross services fees
1,800,000
Cost of Services Rendered
516,800
Rental Income
216,150
Interest Income on Trade Receivables
34,750
Interest Income on bank times deposits
18,000
Interest Expense on Debts to Banks
Taxes Expense (Including income tax for 2008 of
P26,000)
Losses (Including net gambling losses of P
80,000)
30,500
63,000
152,000
Bad Debts Expense (only 60% of this is written off)
78,000
Depreciation Expense
54,000
Pension Contribution
35,400
Fully Deductible Charitable Contribution
Research and Development Cost (amortized for 5 years) 76,500
142,000
Salaries and Wages of Employees
350,000
Rent Expense
Repairs and Maintenance Expense (15% is undocumented) 163,000
Advertising Expense
51,200
26,800
Determine the taxable net income and income tax due:
a. Using the
Itemized Deductions
b. Adopting the
Optional Standard
Deductions
Itemized Deductions
Gross services fees
1,800,000
Cost of Services Rendered
516,800
Gross Profit
1,283,200
ADD:
Rental Income
216,150
Interest Income on Trade Receivables
34,750
Gross Income
1,534,100
LESS:
Deductible Interest expense
Taxes Expense (Including income tax for
2008 of P26,000)
Losses (Including net gambling losses of P
80,000)
Bad Debts Expense (only 60% of this is written off)
24,560
Interest Expense on Debts to Banks
Interest Income on bank times deposits
30,500
18,000
x 0.33
5,940
Deductible Interest Expense
Losses (Including net gambling losses of P 80,000)
= 24,560
152,000
-80000
63,000
72,000
46,800
Bad Debts Expense (only 60% of this is written off)
= 72,000
78,000 x
0.60
= 46,800
Depreciation Expense
54,000
Pension Contribution
35,400
Fully Deductible Charitable Contribution
76,500
Repairs and Maintenance Expense (15% is undocumented)
51200 x 0.15
AND OPTIONAL
STANDARD DEDUCTIONS
Problem 07. A Married individual with three (3) dependent children has the following business data in the Philippines for the current taxable year 2013.
Gross services fees
1,800,000
Cost of Services Rendered
516,800
Rental Income
216,150
Interest Income on Trade Receivables
34,750
Interest Income on bank times deposits
18,000
Interest Expense on Debts to Banks
Taxes Expense (Including income tax for 2008 of
P26,000)
Losses (Including net gambling losses of P
80,000)
30,500
63,000
152,000
Bad Debts Expense (only 60% of this is written off)
78,000
Depreciation Expense
54,000
Pension Contribution
35,400
Fully Deductible Charitable Contribution
Research and Development Cost (amortized for 5 years) 76,500
142,000
Salaries and Wages of Employees
350,000
Rent Expense
Repairs and Maintenance Expense (15% is undocumented) 163,000
Advertising Expense
51,200
26,800
Determine the taxable net income and income tax due:
a. Using the
Itemized Deductions
b. Adopting the
Optional Standard
Deductions
Itemized Deductions
Gross services fees
1,800,000
Cost of Services Rendered
516,800
Gross Profit
1,283,200
ADD:
Rental Income
216,150
Interest Income on Trade Receivables
34,750
Gross Income
1,534,100
LESS:
Deductible Interest expense
Taxes Expense (Including income tax for
2008 of P26,000)
Losses (Including net gambling losses of P
80,000)
Bad Debts Expense (only 60% of this is written off)
24,560
Interest Expense on Debts to Banks
Interest Income on bank times deposits
30,500
18,000
x 0.33
5,940
Deductible Interest Expense
Losses (Including net gambling losses of P 80,000)
= 24,560
152,000
-80000
63,000
72,000
46,800
Bad Debts Expense (only 60% of this is written off)
= 72,000
78,000 x
0.60
= 46,800
Depreciation Expense
54,000
Pension Contribution
35,400
Fully Deductible Charitable Contribution
76,500
Repairs and Maintenance Expense (15% is undocumented)
51200 x 0.15