• Adamson University

• BSBA 2

6-4

Given

It was anticipated that the gross sales for the year of an individual in business subject to the 3% business

tax will not exceed P 3,000,000:

Gross Income (Gross receipts of P 2,000,000) P 1,500,000

Costs and expenses, with supporting vouchers and receipts 1,000,000

Solution and Answer

Requirement A Requirement B

Gross Income P 1,500,000 Gross Receipts P 2,000,000

Less: Itemized Deduction Less: OSD

Costs/Expenses 1,000,000 (2,000,000 x 40%) 800,000

Taxable Income P 500,000 Taxable Income P 1,200,000

Tax at Graduated Rates P 55,000 Tax at Graduated Rates P 250,000

Business Tax (3%) P 45,000 Business Tax (3%) P 60,000

Requirement C: Requirement A is the better option for it offers more deductions resulting in lower tax

payable.

*Gross Income was used in requirement a since NIRC allows Cost of services to be deducted as long as

necessary documents (ORs, books of accounts, etc.) are kept to support the claim.

6-7

Given

Non-cumulative amounts (for each quarter) of the individual in the practice of a profession subject to

the 3% percentage tax.

Gross Receipts Costs/Expenses

First Quarter P 4,000,000 P 2,000,000

Second Quarter 2,000,000 1,000,000

Third Quarter 3,000,000 1,500,000

Fourth Quarter 5,000,000 2,500,000