Page 59 EXERCISES – 1 a The partnership formed is a general professional partnership because the objective of the partners is to exercise a common profession b No, a general professional partnership is not subject to income tax c Yes Although not subject to income tax a general professional partnership is required to file an income tax return for the purpose of furnishing information to the BIR the amount that each partner will receive from the net income of the partnership d The partners are required to file an income tax return; they are taxable on their respective share in the net income of the partnership a They formed a business partnership because the partners have contributed money and industry for the purpose of dividing the profit among themselves b A business partnership is considered as a corporation subject to corporate tax Thus, the partnership is subject to an income tax of P262,500, computed by multiplying the net income of P750,000 by the tax rate of 35% c The share of the partners in the partnership are subject to a final tax of 10% The assessments were justified It is clear that they formed a general co-partnership when their respective share in the extrajudicially partitioned property was entrusted to their mother for administration and the income therefrom having been distributed to them proportionately a Xavier’s ordinary gain on the sale of the machine is P5,000 (55,000– 50,000) b If the partnership sells the machine for P65,000, it has to recognize a gain of P10,000 (P65,000 – 55,000) Rita should report P35,000 in her income tax return representing her salary for five (5) months (January to May) when she was still an employee of the partnership Her share in the net income of P65,000 as partner in the partnership is not returnable because it is subject to final tax of 10% Page 60 a No, because a co-ownership is exempt from income tax b The sale of the coconut land is not taxable to the co-ownership because it is exempt from tax However, the respective share in the P50,000 shall be taxable to the co-owners considering that they are taxable on their share in the income of the co-ownership c Yes By subdividing the lot, introducing developments and entering into series of transactions, the co-ownership has been converted into a partnership, subject to corporate income tax If the partnership availed of itemized deductions, Jehan and Lina shall only be entitled to avail of itemized deduction in computing its taxable income based on the share in the net income of the general professional partnership However, if the partnership availed of optional standard deduction, the partner shall neither be allowed to claim optional nor itemized deduction EXERCISE – ANSWER: D ANSWER: D ANSWER: C ANSWER: C Yvonne (250,000 x 50%) 125,000 Maryfrance (250,000 x 50%) 125,000 Total 250,000 Applying the principle of constructive receipt, the share of Yvonne and Maryfrance in the net income of the partnership is taxable to them, whether distributed or otherwise ANSWER: C The principle of constructive receipt applies whether only a portion or no part of the share in the income has been received by them EXERCISES 8– ANSWER: B Page 61 General professional partnerships are not subject to tax ANSWER: B Share in partnership income: Partnership gross income Less: Expenses Net income Partnership interest Add: Income from other business Gross income Less: Expenses P 450,000 125,000 325,000 40% 160,000 65,000 Total income Less: Personal exemptions Basic personal Additional exemption (25,000 x 2) 50,000 50,000 Taxable income 130,0 00 95,0 00 225,0 00 100,0 00 125,0 00 Tax on P 70,000 P 8,500 55,000 x 20% 11,000 Income tax due 19,500 Less: Withholding tax (P40,000 x 4,000 10%) Income tax payable 15,500 ANSWER: D Partnership net income 325,0 00 60 % 195,0 00 50,0 00 145,0 00 Partnership interest Share in partnership income Less: Personal exemption Taxable income Tax on P140,000 5,000 x 25% P 22,500 1,250 Page 62 Income tax due Less: Withholding tax (P60,000 23,750 6,000 Income tax payable 17,750 x 10%) ANSWER: B Final tax on dividend (8,500 x 10%) 850 ANSWER: A Final tax on interest (3,000 x 600 20%) ANSWER: B Business partnerships are taxable as corporations PROBLEM 8–3.2: ANSWER: D ANSWER: A General professional partnerships, whether registered or not, are exempt from income tax EXERCISE – PROBLEM 8– 4.1 ANSWER: D Sales 1,000,0 00 Less: Cost of sales Inventory, January Add: Purchases Goods available for sale Less: Inventory, December 31 Gross profit Less: Selling and administrative expenses 120,0 00 450,000 570,000 60,000 510,00 490,00 210,00 Page 63 Net income 280,00 50,00 330,00 30% 115,50 Add: Dividend from resident foreign corporation Taxable income Rate of tax Income tax due ANSWER: C Taxable income 330,0 00 99,00 231,00 Less: Income tax Net income after tax Add: Interest on bank deposit (P5,000 x 80%) Dividend from domestic corporation Total income Partnership interest Share in partnership net income Rate of tax Final tax 4,0 00 25,000 29,000 260,00 50% 130,00 10% 13,000 ANSWER: A Partners' share in partnership income are subject to final tax at a rate of 10% PROBLEM 8–4.2 ANSWER: D Gross income Less: Expenses Net income Rate of tax Income tax due ANSWER: C 750,0 00 200,000 550,00 30% 165,000 Page 64 Net income Less: Income tax Net income after tax Add: Dividend from domestic corporation Interest on bank deposit [10,000 – (10,000 x 20%)] Total income 550,000 165,000 385,000 75,000 8,000 468,000 Share of Max (468,000 x 55%) x 10% Share of Jess (468,000 x 45%) x 10% 25,740 21,060 PROBLEM 8–4.3: ANSWER: C Net income, sole proprietorship P 370,000 50,000 320,000 Less: Personal exemption Taxable income Tax on P 250,000 70,000 x P 50,000 21,000 30% Income tax due 71,000 ANSWER: D Net income, sole proprietorship P 120,000 50,000 70,000 Less: Personal exemption Taxable income Tax on P 70,000 P 8,500 ANSWER: B Dividend, gross of tax (20,000/90%) P 22,222 10% 2,222 Rate of tax Final tax on dividend ANSWER: C Net income after tax Add: NOLCO Total Partnership interest 500,000 230,000 730,000 40% Page 65 Share in the partnership income Dividend tax rate Dividend tax 292,000 10% 29.200 ANSWER: C The income tax rate on corporations and partnerships shall be 30% effective January 1, 2009 PROBLEM 8-4.4: ANSWER: A Gross compensation income P 170,000 50,000 120,000 Less: Personal exemption (head of family) Taxable income Tax on P 70,000 50,000 x P 8,500 12,500 25% Income tax due 21,000 ANSWER: A Net income of carenderia (325,000 – 265,000) Less: Personal exemption Taxable income Tax on P 10,000 P 60,000 50,000 10,000 500 ANSWER: C Gross compensation income Less: Personal exemption (single) Taxable income Tax on P 70,000 50,000 x 170,000 50,000 120,000 P 8,500 12,500 25% Income tax ANSWER: D Net income from carenderia Share in partnership income (70,000 x 180/400) Total income Less: Personal exemption 21,000 95,500 31,500 127,000 50,000 Page 66 Net income 77,000 Tax on P70,000 7,000 x 8,500 1,400 Income tax 9,900 20% PROBLEM 84.5 ANSWER: A The share of the partners in the gross income of an exempt partnership is considered as an ordinary income and not subject to final tax ANSWER: C The partnership formed for the purpose of selling kinalas to the public is a taxable partnership; tt is subject to corporate tax Gain on sale of a manufacturing equipment is a business (ordinary) gain which is subject to ordinary income tax ANSWER: A An unregistered partnership falls under the phrase “partnership no matter how created or organized.” Hence, it is considered as a corporation subject to corporate tax EXERCISE – ANSWER: C None, the mere sharing of gross returns does not in itself establish a partnership To be considered as a partnership, there must be an unmistakable intention between them to form a partnership When they decided to invest the income of the land by purchasing an apartment house, they have formed a partnership on that income because they have contributed money to a common fund for the purpose of dividing the profit between themselves Moreover, there is an unmistakable intention between them to form a partnership ANSWER: A Page 67 See the discussion in No ANSWER: C No gain shall be reported in the tax returns because the sale of the land is subject to a final tax of 6% of the selling price, market value, or zonal value, whichever is the highest price among them However, if what is being sold are subdivision lots the gain on sale are includible in the income tax return because these are cases of sale of ordinary assets ANSWER: A The apartment building is a co-ownership Therefore, their shares in the net income are to be reported in their respective income tax returns If they decide to sell the apartment, it shall not be subject to final tax because it is an ordinary asset The gain on sale shall not even be taxable to the co-ownership However, the share of the respective co-owners shall be subject to tax ANSWER: D To be considered as having formed a business partnership, Sabado and Domingo must have entered into series of transactions A law firm is classified as a general professional partnership Therefore, it is not subject to income tax EXERCISES 9-1 a The income of P250,000 is taxable to Joni because it was earned prior to his death Only income earned after death are taxable to the estate b The estate is subject to income tax because it is under judicial settlement c The P175,000 is taxable to the estate because it is under judicial settlement If the estate is not under judicial settlement, it will not be subject to income tax because it shall be treated as a coownership A co-ownership is not subject to income tax Assuming that the trust created is a revocable trust, both the trustor and the beneficiary are subject to tax Thus, Villa and Devy are Page 68 subject to tax on the income of the trust However, if what is created is an irrevocable trust only the beneficiary is liable because the annual income of P300,000 goes entirely to the trust Mrs Bisana will rule in favor of Erika Sec 62 of NIRC states as follows: “SEC 62 Exemption Allowed to Estates and Trusts – For the purpose of the tax provided for in this Title, there shall be allowed an exemption to Twenty thousand Pesos (20,000) from the income of the estate or trust.” This section is not covered by the amendment caused by RA 9504 because said law is explicit that only Sections 22, 24, 34, 35, 51 and 79 of RA 8424 are affected by the amendatory law Following the latin maxim “inclusio unios est exclusion alterius,” (what the law does not include, it excludes) it is crystal clear that the personal exemption of P20,000 on estates and trusts is hereby retained It does not therefore follow the increase in the personal exemption of individual taxpayers EXERCISES 9-2 ANSWER: C ANSWER: C ANSWER: A ANSWER: B ANSWER: B Gross income Less: Expenses Amount distributed to beneficiaries (100,000 x 2) Net income Less: Exemptions Taxable income Tax on P30,000 P 400,000 150,000 200,000 350,000 50,000 20,000 30,000 P 2,500 Page 107 Less: Allowable deductions Salaries and wages Rent expense Light and water Office supplies Insurance expense Travelling expense Advertising expense Representation and entertainment expense (45,000 - 25,000) Depreciation expense Repairs and maintenance (15,000-7,200) Postage and telephone Interest expense Taxes and licenses [76,000-(12,000+3,000)] Losses [130,000-(20,000+15,000)] Bad debts (36,000 x 40%) Pension trust 350,0 00 36,0 00 35,0 00 16,0 00 24,0 00 25,0 00 22,0 00 20,0 00 20,0 00 7,80 6,50 14,0 00 61,0 00 95,0 00 14,4 00 25,0 00 Net income Add: Other income Sale of office building 600,000 Less: Cost 450,000 Rent income Refund of overpaid expenses Taxable income before contributions Less: Contributions 150,0 00 25,000 12,000 771,70 1,028,30 187,00 1,185,30 Page 108 Actual P30,00 59,265 Limit (1,185,300 x 5%) Deductible (lower) 30,00 1,155,30 35% 404,355 Taxable income after contributions Rate of tax Income tax 2) Gross sales P3,000,0 00 1,200,00 1,800,00 Less: Optional standard deduction (3,000,000 x 40%) Net Add: Other income Sale of office building 600,000 Less: Cost 450,000 Rent income Refund of overpaid expenses 150,000 25,000 12,000 Taxable income before contributions Less: Contributions Actual P30,00 99,350 Limit (1,987,000 x 5%) Deductible (lower) Taxable income after contributions Rate of tax Income tax due EXERCISES 13-1 a b c d Fiscal year Fiscal year Not acceptable Calendar year 187,00 1,987,00 - March to February 28/29 - January to December 31 30,00 1,957,00 30% 587,10 Page 109 No, Cathy should wait for the time sufficient funds have been deposited to cover the value of the check Although she has already received a check from her customer, she still cannot consider it as proper payment until it has been encashed with the drawee bank a P3,000 There was already cash outlay although paid in advance b None Mere indication of intent to contribute does not entail payment of cash c None Payment in check does not mean payment of cash until the drawee bank pays it d None Payment of cash was made only of the following year In 2008, Gie must report P60,000; the amount of money she received representing the first and last month’s rent The P40,000 is not income because it is only a deposit and not part of the rental value In 2009, Gie should report an income of P135,000 representing the months of February, March, April, May and half of July The rental for the months of January and June have been prepaid during the previous year and were already reported as income in 2008 The P8,000 which was withheld should not be considered as income since it is only a payment on the property damaged Cost incurred to date Cost to complete Total estimated costs Percentage of completion Contract price Total estimated costs Gross revenue x Percentage of completion Realized revenue to date Realized revenue in prior years Realized revenue each year Selling price Selling price First Second 3,000,00 6,500,00 0 7,000,000 3,500,000 10,000,00 10,000,00 0 30% 65% Third 10,500,0 00 10,500,0 00 100% 11,200,00 11,200,00 0 10,000,00 10,000,00 0 1,200,000 1,200,000 30% 65% 11,200,0 00 10,500,0 00 700,000 100 % 700,000 780,000 360,000 780,000 360,000 360,000 420,000 ( 80,0 00) P180,000 P180,000 Page 110 Less: Mortgage assumed by buyer Balance Add: Excess of mortgage over cost (100,000 – 87,000) Contract price Downpayment Excess of mortgage over cost (100,000 – 87,000) Installment received (year of sale) Initial payment 100,000 80,000 13,000 93,000 20,000 13,000 20,000 53,000 Initial payment rate (53,000/180,000) Selling price Less: Cost Selling expenses Gross profit (taxable in 2008) 29.44% P180,000 87,000 12,000 99,0 00 81,000 Year of Sale 2006 Collectio Gross profit Gross n rate profit P 35% P 14,000 40,000 2007 150,00 33% 49,500 2008 240,00 32% 76,800 Gross profit to be recorded in P140,30 2008 Payment, Signing of Contract P12,5 00 Installment Payments: December 1, 2009 December 1, 2010 Total Add: Mortgage assumed by buyer Selling price Less: Mortgage assumed by buyer Contract price P 25,000 12,500 37,50 50,00 10,00 60,00 10,00 510,0 00 Page 111 Initial payment 12,50 Initial payment rate (12,500/60,000) 20.83 % Selling price Rate of Tax Capital gains tax (final tax) Year of Payment 2008 2009 2010 (P 12,500/50,000 x P 3,600) (P 25,000/50,000 x P 3,600) (P 12,500/50,000 x P 3,600) Total Selling price 250,00 250,00 50,00 20 % Contract price Initial payment Initial payment rate (50,000/250,000) Selling price 250,00 150,0 00 100,000 % 5,0 00 Less: Cost Net Capital gain Rate of Tax Final Tax 2006 2007 2008 2009 2010 Total (P (P (P (P (P EXERCISES 13 – 60,00 6% 3,60 Tax payable 900 1,800 00 3,600 50,000 100,000 50,000 25,000 25,000 / / / / / 250,000 250,000 250,000 250,000 250,000 x x x x x 5,000) 5,000) 5,000) 5,000) 5,000) P 5,000 1,000 2,000 1,000 500 500 Page 112 Answer: B Answer: A Amount of interest paid Answer: B Amount received in 2000 00 200,0 00 Answer: B Deductible amount 200,0 00 EXERCISES 13 – Answer: D Answer: A Answer: C Answer: C Downpayment, January Payment, December Initial payment Add: Payment, December 1, 2009 Selling price 25,0 00 25,00 50,00 150,00 200,00 Answer: C Selling price Less: Cost Gain on sale Rate (long-term) Long-term capital gain 200,0 00 120,00 80,000 50% 40,00 Page 113 Initial payment rate (50,000/200,000) Gross profit rate (40,000/200,000) Income to be reported (50,000 x 20%) 25% 20% 10,0 00 Answer: D Income to be reported (P150,000 x 20%) 30,000 Answer: A Gross selling price (1,000 x P150) Less: Cost (1,000 x P20) Net capital gain Rate (long-term) Long-term capital gain Tax on P65,000 x 5% x 80% 150,0 00 20,00 130,00 50% 65,000 2,60 Answer: D None Shares of stocks which are traded in the stock exchange are not subject to income tax Answer: C Selling price/Contract price 800,0 00 Less: Cost 600,00 Gross profit 200,00 Downpayment 100,0 00 Due, October 50,000 Due, November 50,000 Due, December 50,00 Initial payment 250,00 Divide by: Selling price 800,00 Initial payment rate 31.25 % The income cannot be reported in installment because the initial Page 114 payment is more than 25% of the selling price 10 Answer: C 11 Answer: D EXERCISES 14 -1 No The income tax on income derived from sources within of a nonresident alien who is not engaged in trade or business in the Philippines is subject to a Final Withholding Tax No The city government should not have withheld taxes because the amount received after five years as just compensation is not in any way a profit, gain or income on the part of Vargas In the same vein, the 6% annual interest paid by the city government in not income The same partakes of a nature of a penalty or indemnity due and accruing to Vargas for having been deprived of the use and benefit by not being paid of the fair market value of the property since its’ taking years ago Yes because prizes and winnings are subject to a final withholding tax of 20% It withholding of the tax is the responsibility of the payor EXERCISE 14-2 CASE PROBLEM The BIR is correct Revenue Memorandum Circular 34-2008 categorically states: “It is a well settled rule that director’s fees are taxable, for income tax purposes, as compensation income when the recipient director is an employee of the corporation which pays the same Being embraced within the term “compensation income”, the director’s fees are subject to the withholding tax on wages imposed under Section 79, in relation to Section 24(A), both of the National Internal Revenue Code The above tax treatment applies whenever it is established that the director and the corporation has an employer-employee relationship, i.e President of a corporation sitting as a Page 115 member of the Board of Directors Revenue Regulations No 2-98 provides that “the term “compensation” means all remuneration for services performed by an employee for his employer under an employer-employee relationship, unless specifically excluded by the Code” Thus, fees including director’s fees, if the director is, at the same time, an employee of the employer/corporation constitute compensation income (Section 2.78.1, RR No 2-98).” Considering, therefore, that Manolo Tolo is the President and at the same time sitting as member of the Board of Directors, the fees received by him from the corporation is subject to income tax and, consequently to the withholding tax on wages EXERCISES 15-1 Acido is still required to file income tax return because his monthly compensation income does not exceed P5,000 or P60,000 per annum a Yes A taxpayer earning business income is required to file income tax return regardless of the amount of gross income b No The sole income is passive which is subject to final tax c Yes The compensation income does not exceed P 60,000 It is not subject to substituted filing d Yes The compensation income does not exceed P 60,000 Moreover, the tax was not properly withheld, the taxpayer is required to file tax return e Yes The total compensation income does not exceed P 60,000 Moreover, since she is working with two (2) employers, she is required to file tax return f No Because the compensation income exceeds P 60,000 g Yes Because the taxpayer is a mixed income earner h Yes Because the income is a professional income i Yes Nonresident aliens are required to file income tax return on income derived from sources within the Philippines j No The income derived from sources within the Philippines of a NRA NETB is subject to final tax a Income of Edward 150,000 Share in a unidentifiable income (75,000 x ½) 37,500 Total Less: Personal exemption Basic personnel P 187,500 P 32,000 Page 116 Additional (P 8,000 x 1) 40,000 Taxable income Income of Emie Share in unidentifiable income 37,500 Total Less: Personnel exemption Taxable income 8,000 147,500 100,000 137,500 32,000 105,500 b Husband and wife shall compute separately their individual income tax based on taxable income of each However, spouses who not derive income purely from compensation shall file a return for the taxable year to include the income of both spouses c No, where it is impracticable for the spouses to file one return, each spouse may file a separate return but the bureau shall consolidate the returns so filed In the instant case, since it is impracticable for them to file a joint return they can be allowed to file separately the income tax return of each Income of Crisanto Add: Income of Donita Income to be reported Less: Personal exemption Basic personal Additional (from Donita) Taxable income P120,000 32,000 152,000 P25,000 8,000 33,000 119,000 1st Quarter Gross income Less: Deductions Net income Add: Rent income (114,000/95%) Taxable income Rate of tax Income tax Less: Tax credit – withholding tax on rent (120,000-114,000) Income tax due P375,000 160,000 215,000 120,000 335,000 35% 117,250 6,000 111,250 2nd Quarter Gross income, 1st and 2nd Q (P375,000 + 895,00 Page 117 520,000) Less: Deductions, 1st and 2nd Q (P160,000 + 650,000) Net income Add: Rent income, 1st and 2nd Q (P120,000 + 120,000) Taxable income 810,00 85,000 240,00 325,00 35 % 113,75 Rate of tax Income tax Less: Tax credit Tax paid, 1st Quarter Withholding tax on rent, 1st Q Withholding tax on rent, 2nd Q 111,250 6,000 6,000 Income tax due 3rd Quarter Gross income, 1st, 2nd, & 3rd Q (375,000+520,000+480,00) Less:Deductions, 1st, 2nd, & 3rd (P160,000+650,000+230,000) Net income Add: Rent income, 1st, 2nd, & 3rd Q (120,000 x 3) Taxable income Rate of tax Income tax Less: Tax credit Tax paid, 1st quarter Tax, 2nd quarter Withholding tax on rent, 1st,2nd & 3rd Q Income tax due Final Quarter Gross income Less: Deductions Q P 111,250 18,000 123,25 ( 9,50 0) 1,375,0 00 1,040, 000 335,000 360, 000 695,000 35 % 243,250 129,250 114,000 2,155,0 00 1,590,0 00 Page 118 Net income Add: Rent income 565,000 480, 000 1,045,0 00 35 % 365,750 Taxable income Rate of tax Income tax Less: Tax credit Tax paid, 1st quarter 2nd quarter 3rd quarter Withholding tax on rent, 1st to 4th quarter Income tax due 111,250 114,000 24,00 249,250 116,50 Yes because he is deriving compensation income concurrently from two employers at anytime during the taxable year Mr Pen Sioner is exempt from income tax on his pension from the GSIS Thus, he is not required to file an income tax return He is not also required to file an income tax return on whatever interest income will be derived from the bank deposit with Banco de Oro because it is subject to final withholding tax A domestic corporation is considered as a corporation subject to corporate tax In a calendar year, a business partnership is required to file three (3) times for its Quarterly Income Tax Return within sixty (60) calendar days after each cumulative quarter For the th cumulative quarter (final quarter), said taxpayer must file its income tax return on or before the 15th day of the 4th month of the following year EXERCISES 15 – ANSWER : D A contract worker is taxable as a nonresident citizen A contract worker shall file an income tax return on his income derived from sources within the Philippines (Sec 51 {4,B}, NIRC) A compensation earner who is receiving his income from or more employers is required to file an income tax return ANSWER: A Page 119 The income tax return shall be filed in duplicate (Sec 51 {4,}, NIRC) ANSWER: D Married individuals must file a joint return even if they are mixed income earners ANSWER: B As a rule, a pure compensation income earner is covered by the substituted filing of income tax return Hence, they are not required anymore to file a return Answer: B Amount payable on every installment (P22,000/2) Less: Withholding taxes (P5,000 + 5,000) Income tax due, 1st installment P 11,000 10,000 1,000 Amount payable, 2nd installment P 11,000 Answer: B Gross income (P495,000/99) P 500,00 480,00 20,000 35% 7,000 Less: Deductions Taxable income Rate of tax Income tax Less: Tax credit Excess credit carry-over Withholding tax Income tax due 15,000 5,000 20,00 ( 13,00 0) Answer: C Gross income, 2nd quarter (792,000/99%) + (495,000/99%) Less: Deductions (700,000 + 480,000) Taxable income P1,300,0 00 1,180,0 00 120,00 Page 120 35 % 42,000 Rate of tax Income tax Less: Tax credit Withholding tax, 1st quarter (500,000 – 495,000) 2nd quarter (800,000 – 792,000) Excess credit carry-over from the preceding quarter Income tax due Answer: D Answer: C Answer: B 5,000 8,000 13,0 26,000 00 26,000 16,000 EXERCISES 15 – ANSWER: B All of the enumerated statements are required to be attached to the tax return of a business whose gross quarterly receipts/sales exceed P 150,000 Since the quarterly sales in the problem is P1,500,000, then, all of them (from A to D) are required to be attached to the return ANSWER: B All such corporations, companies, partnership or persons shall keep the books or records mentioned in Section 232 hereof in a native language, English or Spanish (Sec.234, NIRC) ANSWER: D ANSWER: A ANSWER: C Sometimes the community tax receipt number of the customer is required to be indicated in the invoice but not the community tax receipt number of the business establishment Page 121 ... considered as income without 14 ANSWER: A Income within Income without Total income Percentage of income within (1 ,80 0,000/2,000,000) Dividends received Less: Income within Income without P 1 ,80 0,00... Taxable income Tax on P 70,000 50,000 x 170,000 50,000 120,000 P 8, 500 12,500 25% Income tax ANSWER: D Net income from carenderia Share in partnership income (70,000 x 180 /400) Total income Less:... Net income Less: Income tax Net income after tax Add: Dividend from domestic corporation Interest on bank deposit [10,000 – (10,000 x 20%)] Total income 550,000 165,000 385 ,000 75,000 8, 000 4 68, 000