False – Proceeds of life insurance is not taxable regardless of whoever would be the recipient, except when the insured person outlived his life insurance and received the proceeds.. Fal
Trang 1CHAPTER 5
EXCLUSION FROM GROSS INCOME
Problem 5 – 1 TAXABLE OR NONTAXABLE with income tax
4 Nontaxable with IT 14 Nontaxable
Problem 5 – 2 TAXABLE OR NONTAXABLE with income tax
1 Nontaxable 12 Nontaxable, if not exceeding 10 days
3 Nontaxable 14 Taxable (based on proceeds or selling price or zonal value,
whichever is higher)
6 Nontaxable 17 Taxable, except when BIR registered with 50 year old retiree;
10 years service and first time to avail
8 Taxable 19 Nontaxable if Philippine Sweepstakes and Lotto
Problem 5 – 3 TRUE OR FALSE
1 False – nontaxable
2 True
3 True
4 False – Proceeds of life insurance is not taxable regardless of whoever would be the recipient, except when the insured person outlived his life insurance and received the proceeds The excess of proceeds over premium paid is taxable
5 False – include in gross income
6 False – Bequest is a personal property
7 True
8 True
9 True
10 False – Nontaxable
11 True
12 False – Nontaxable
13 False – Some prizes and awards are not taxable Eg Ramon Magsaysay Awards
14 True
15 True
16 False – Include in gross income because income from gift is subject to income tax
17 False – Exempt from income tax
18 True
11 A
12 D
13 D
14 A
15 B
Trang 2Problem 5 –7 C
In general, a MWE is not subject to WTW and income tax on his compensation income But if
he has other income that is subject to normal tax, his entire income during the year will be subject to income tax, his compensation income, however, will not be subject to WTW
Taxable Nontaxable
Taxable Tax-exempt
Charitable contribution (deductible only from business income) 25
Zero, because, the P270,000 cash surrender value is just a return of contribution of P360,000
Nontaxable Taxable Actual damages for unrealized profit
Interest on non-taxable damages
Actual damages for lost products
Exemplary damages
Moral damages
Actual liquidated damages
Total
P200,000 50,000 50,000 80,000
P380,000
P100,000 20,000
P120,000
Trang 3Terminal pay P 60,000
The termination is due to cause within the control of Jalosjos
Zero, all items enumerated are not subject to income tax
P50,000 business income for year 4
Zero All gifts enumerated are not subject to income tax
Zero All winnings received by Miss Lara are subject to tax because she has entered into a contest as Miss International
Zero Interest and gain on sale of investment in a 5-year government bonds is exempt from income tax
Trang 4Note: The cost of product produced need not to be deducted anymore because of the term
“income from sale of invented products.”
Interest income from foreign currency deposit (P2,000,000 x 7.5%) P150,000
Problem 5 –35
1 Compensation income (P5,000 x 10)
2 Retirement benefits
Salary earned
Gross income
3 Same answer with No 1
P 50,000 P500,000 50,000 P550,000
P 50,000
Problem 5 –36
Winnings from charity horse race sweepstakes from PCSO
Interest on government debt securities
Damages for breach of contract (P1,000,000 x 60%)
Gains from redemption of shares in mutual fund
Gain from sale of bonds with maturity of more than five years
Gifts from friends
Total exclusion from gross income
P 500,000 100,000 600,000 300,000 60,000
200,000 P1,760,000
Problem 5 –37
Exclude Include Proceeds of his life insurance (P2,000,000) – (P15,000 x 25)
Proceeds of his mother’s life insurance
Cash gift
Inheritance
Rent income
Total
P 375,000 1,000,000 50,000 3,000,000 P4,425,000
P1,625,000
100,000 P1,725,000
Problem 5 –38
No, the P1,500,000 transfer to be received by Miss Tandana is to be included for income taxation because the transfer is in recognition of her services rendered It is not to be included as a part of estate tax
Problem 5 –39
All enumerated items are not subject to normal (tabular) tax