MEMORY AID IN TAXATION LAWSAN BEDA COLLEGE OF LAW – 2003 CENTRALIZED BAR OPERATIONS

Reproduction in any form of this copy is strictly prohibited!!!

MEMORY AID IN TAXATION LAWSAN BEDA COLLEGE OF LAW – 2003 CENTRALIZED BAR OPERATIONS

Reproduction in any form of this copy is strictly prohibited!!!

JJ – 1TAXATION LAW COMMITTEE: Chairperson: Rhodaline Regoso; Asst. Chairperson & EDP: Maricel Alisuag; Subject Heads:Junelet Mataro, Michelle Alvarez, Efren Dizon, Khan Guieb; Members: Alexis Cervantes. Leizl Calimaran, Berna Quibal, Noreli De Claro, Jocelyn Gamboa, Albert Rodriguez, Karla Cabel, Joey Caraig, Rodolfo Quitolbo, Liam Pagdanganan, Paul Lawrence Lim, Alder Delloro, John Ivan Tablizo, Ria Ibaviosa, Pancho Vasquez, Aileen Roxas, Leif Opiña

ANNEX JJ: PARTNERSHIP

JJ – 2TAXATION LAW COMMITTEE: Chairperson: Rhodaline Regoso; Asst. Chairperson & EDP: Maricel Alisuag; Subject Heads:Junelet Mataro, Michelle Alvarez, Efren Dizon, Khan Guieb; Members: Alexis Cervantes. Leizl Calimaran, Berna Quibal, Noreli De Claro, Jocelyn Gamboa, Albert Rodriguez, Karla Cabel, Joey Caraig, Rodolfo Quitolbo, Liam Pagdanganan, Paul Lawrence Lim, Alder Delloro, John Ivan Tablizo, Ria Ibaviosa, Pancho Vasquez, Aileen Roxas, Leif Opiña

MEMORY AID IN TAXATION LAWSAN BEDA COLLEGE OF LAW – 2003 CENTRALIZED BAR OPERATIONS

Reproduction in any form of this copy is strictly prohibited!!!

MEMORY AID IN TAXATION LAWSAN BEDA COLLEGE OF LAW – 2003 CENTRALIZED BAR OPERATIONS

Reproduction in any form of this copy is strictly prohibited!!!

Problem:

AB Partnership with partners Ms. A, single, and Mrs. B, married, sharing equally in the partnership net income or loss.

In 2002, the partnership and the partners had the following data:

Gross Income Expenses

AB Partnership P 1,000,000 P 600,000Ms. A –Own laundry business 400,000 150,000Mrs. B – Own parlor business 600,000 250,000

Compute the income tax if:(a) the partnership is a general professional

partnership; (b) the partnership is a taxable partnership

GENERAL PROFESSIONAL PARTNERSHIP AB Partnership: Gross Income P 1,000,000 Less: Expenses of operations 600,000 Net income P 400,000 Less: Income tax 0 Distributable income P 400,000

Partner A Partner B

Gross Income - share in AB Partnership P 200,000 200,000 Gross Income - own 400,000 600,000 Total 600,000 800,000 Less: Expenses - own 150,000 250,000 Basic personal exemption 20,000 32,000 Taxable income P 430,000 P 518,000

Income Tax Payable P 104,000 P 130,760 A - On P250,000 P50,000 180,000 @30% 54,000 B - On P500,000 P125,000 18,000 @32% 5,760

TAXABLE PARTNERSHIP AB Partnership Gross Income P 1,000,000

Less: Expenses of operations 600,000 Net income P 400,000 Less: Income tax @ 32% 128,000 Distributable income P 272,000

Partner A Partner B

P 136,000 136,000 FINAL TAX AT 10% (see Annex A) P 13,600 P 13,600

Own gross income P 400,000 600,000 Less: Own expenses 150,000 250,000 Own net income 250,000 350,000 Less: Personal exemption 20,000 32,000 Taxable income P 230,000 P 318,000

Income Tax Payable P 45,000 P 70,400 A - On P140,000 P22,500 90,000 @25% 22,500 B - On P250,000 P50,000 68,000 @30% 20,400