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It was also determined that the requisites for

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• It was also determined that the requisites for exemption for foreign-sourceddividends under Section 27D have been met.• Upon inspection of the books, one record shows that entertainment and representationexpenses are duly supported by receipts and are business connected.REQUIRED: Compute for the following:200. Taxable income for the yearA. P34,900,000B. P33,650,000C. P37,095,600D. P35,545,600
201. Corporate income tax due
202. Capital gains tax
203. Final withholding tax on passive income
204. Total income tax expense for the yearA. P9,708,500B. P10,414,900C. P10,569,900D. P11,108,500
SITUATION 53:In the course of your examination, as a revenue officer, of the audited financialstatements of ABC Corporation which sells and leases real estate, and by virtue of aLetter of Authority duly issued by the BIR, the income statement of ABC Corporationon its first year of operation shows:Revenues:Gain on sale of residential lotsP 750,000Bank interest income40,000Dividend from XYZ Corporation65,000Rental income4,200,000Total5,055,000Expenses:Salaries and wagesP 750,000Depreciation400,000Entertainment and representation45,000Office supplies110,000Advertising expense60,000Interest expense120,000Taxes and licenses250,000Total1,735,000Net income before income tax3,320,000Less: Income tax expenses616,250Net income after income tax2,703,750The income tax due for the year as computed by ABC shows:Net income before income tax3,320,000Less:Bank interest income40,000Dividend from XYZ Corporation65,000Gain on sale of lots750,000855,000Net taxable income2,465,000Corporate income tax rate25%Income tax expense616,250During examination, you observed the following:1) The balance sheet for the taxable year showed deferred rent income of P600,000.The payor has properly withheld the appropriate withholding tax on rentals.2) The bank interest income is net of 20% final withholding tax.3) XYZ Corporation is a domestic corporation4) The gain on sale of residential lots represents gain on sale of two residentiallots with selling price of P1,600,000 each.5) Interest expense includes interest on late payment of tax amounting to P10,000.6) Entertainment and representation expenses are duly supported by receipts and arebusiness connected.7) Taxes and licenses in the notes to Financial Statements showed the following:a. Documentary stamp tax on sale of the residential lotsP60,000b. Surcharge and penalties on late payment of taxP40,000c. Withholding tax on the sale of the lots - P120,000d. Permits and licensesP30,0008) Total assets, excluding land, of the entity are valued at 110M.REQUIRED: Compute for the following:205. How much should be reflected in Page 2, Part IV, Item 29 of BIR Form 1702-RT ofABC Corporation’sannual income tax return?

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Term
Summer
Professor
Jane Smith
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