Taxation in the United States and Net Taxable Income
INCOME TAXATION 6TH Edition (BY: VALENCIA & ROXAS)
SUGGESTED ANSWERS
127
Chapter 14: Income Taxes of Estates & Trusts
CHAPTER 14
INCOME TAXES OF ESTATES & TRUSTS
Problem 14 – 1 TRUE OR FALSE
1. False – P20,000
2. True
3. True
4. True
5. True
6. True
7. False – It shall be in writing either as trust inter-vivos or through a will.
8. False – A trustor is the person who establishes the trust, not the trustee.
9. True
10. True
11. True
12. True
Problem 14 – 2 TRUE OR FALSE
1. False – A taxpayer is required to file ITR regardless of the result of business whether there is income or loss; hence, the ITR of irrevocable trust should be filed if its income is P20,000 and below.
2. True
3. True
4. True
5. False – The income is taxable.
6. True
7. True
8. False – special deduction related to amount distributed to beneficiary is not allowed when a trust is administered in a foreign country. [Sec. 61 (C), NIRC]
9. True
10. False – Since the trusts are irrevocable, their income should not be combined with the income of the trustor.
Problem 14 – 3
1. B
2. C
3. A
4. D
5. B
6. A
7. A
8. B
9. D
10. C
11. C
128
INCOME TAXATION 6TH Edition (BY: VALENCIA & ROXAS)
SUGGESTED ANSWERS
Chapter 14: Income Taxes of Estates & Trusts
Problem 14 – 4
D
Gross income
Less: OSD (P200,000)
Net income
Less: Basic personal exemption
Net taxable income
P200,000
80,000
P120,000
50,000
P70,000
The estate can deduct greater amount of deductions by using OSD. Section 35(C) of NIRC provides that if the taxpayer dies during the taxable year, his estate may still claim personal and additional exemptions for himself and his dependents.
In the given problem, Mrs. Ayugat can claim her basic personal exemption of P50,000 but she cannot claim additional exemptions because her husband is the proper claimant of the additional exemptions unless the husband waives his right or has no income taxable in the
Philippines.. [Sec. 79(F), NIRC]
Problem 14 – 5
Note: Since the requirement is tax savings, if is to be
SUGGESTED ANSWERS
127
Chapter 14: Income Taxes of Estates & Trusts
CHAPTER 14
INCOME TAXES OF ESTATES & TRUSTS
Problem 14 – 1 TRUE OR FALSE
1. False – P20,000
2. True
3. True
4. True
5. True
6. True
7. False – It shall be in writing either as trust inter-vivos or through a will.
8. False – A trustor is the person who establishes the trust, not the trustee.
9. True
10. True
11. True
12. True
Problem 14 – 2 TRUE OR FALSE
1. False – A taxpayer is required to file ITR regardless of the result of business whether there is income or loss; hence, the ITR of irrevocable trust should be filed if its income is P20,000 and below.
2. True
3. True
4. True
5. False – The income is taxable.
6. True
7. True
8. False – special deduction related to amount distributed to beneficiary is not allowed when a trust is administered in a foreign country. [Sec. 61 (C), NIRC]
9. True
10. False – Since the trusts are irrevocable, their income should not be combined with the income of the trustor.
Problem 14 – 3
1. B
2. C
3. A
4. D
5. B
6. A
7. A
8. B
9. D
10. C
11. C
128
INCOME TAXATION 6TH Edition (BY: VALENCIA & ROXAS)
SUGGESTED ANSWERS
Chapter 14: Income Taxes of Estates & Trusts
Problem 14 – 4
D
Gross income
Less: OSD (P200,000)
Net income
Less: Basic personal exemption
Net taxable income
P200,000
80,000
P120,000
50,000
P70,000
The estate can deduct greater amount of deductions by using OSD. Section 35(C) of NIRC provides that if the taxpayer dies during the taxable year, his estate may still claim personal and additional exemptions for himself and his dependents.
In the given problem, Mrs. Ayugat can claim her basic personal exemption of P50,000 but she cannot claim additional exemptions because her husband is the proper claimant of the additional exemptions unless the husband waives his right or has no income taxable in the
Philippines.. [Sec. 79(F), NIRC]
Problem 14 – 5
Note: Since the requirement is tax savings, if is to be