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Allowable Deductions

The document provides financial information for an itemized deductions calculation and optional standard deduction calculation for a business. It shows gross sales, costs, income, allowable itemized deductions, and resulting taxable income amounts under both methods. The optional standard deduction reduces taxable income by $600,000 compared to the itemized deductions method.

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Lyka Roguel
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75 views

Allowable Deductions

The document provides financial information for an itemized deductions calculation and optional standard deduction calculation for a business. It shows gross sales, costs, income, allowable itemized deductions, and resulting taxable income amounts under both methods. The optional standard deduction reduces taxable income by $600,000 compared to the itemized deductions method.

Uploaded by

Lyka Roguel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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ITEMIZED DEDUCTIONS

Net sales 1,500,000.00


COS (300,000.00)
Gross profit 1,200,000.00
Dividend from non resident corporation 50,000.00
Gross business income 1,250,000.00
Allowable deductions:
Insurance expense (30,000.00)
Salaries (500,000.00)
Depreciation (100,000.00)
Rent (100,000.00)
Utilities (30,000.00)
Entertainment (7,500.00)
Bad debts (8,000.00) (775,500.00) (a.)
Taxable business income 474,500.00
Compensation income 280,000.00
Taxable income 754,500.00 (b.)

OPTIONAL STANDARD DEDUCTION

Gross sales 1,500,000.00


Dividend from non resident corporation 50,000.00
Gross business income 1,550,000.00
OSD (600,000.00) (a.)
Taxable business income 950,000.00
Compensation income 280,000.00
Taxable income 1,230,000.00 (b.)
Cash Accrual
1 Repairs expense 35,000.00 20,000.00
2 Depreciation expense - 20,000.00
3 Supplies expense 1,000.00 1,000.00
4 Bad debts - 2,000.00
5 Interest 40,000.00 40,000.00
2020 2021 2022
Gross sales 2,002,000.00 1,680,000.00 1,680,000.00
COS (572,000.00) (480,000.00) (480,000.00)
GP 1,430,000.00 1,200,000.00 1,200,000.00
Gain on sale of equipment 20,000.00 100,000.00
Dividend from residet foreign corp 50,000.00 50,000.00
Gross business income 1,500,000.00 1,250,000.00 1,300,000.00
Itemized deductons (1,497,000.00) (1,156,000.00)
OSD (520,000.00)
Taxable Income (NOL) 3,000.00 94,000.00 780,000.00
Applied NOLCO (5,000.00) (2,000.00) -
Taxable Income (NOL) (2,000.00) 92,000.00 780,000.00
2023
1,960,000.00
(560,000.00)
1,400,000.00

1,400,000.00
(1,233,000.00)

167,000.00

167,000.00
1st 2nd 3rd
Gross sales 697,200.00 1,579,200.00 2,349,200.00
COS (199,200.00) (451,200.00) (671,200.00)
Gross profit 498,000.00 1,128,000.00 1,678,000.00
Itemized deductions (500,000.00) (1,100,000.00) (1,660,000.00)
Taxable income (NOL) (2,000.00) 28,000.00 18,000.00
Applied NOLCO from prior year (25,000.00) (25,000.00)
Taxable income (NOL) (2,000.00) 3,000.00 (7,000.00)
4th
3,152,800.00
(900,800.00)
2,252,000.00
(2,240,000.00)
12,000.00
(25,000.00)
(13,000.00)
1 Charitable contributions
Govt for education 200,000.00
Tahanang walang pinto, accredited NGO 100,000.00
UNICORN, orphanage 300,000.00
600,000.00

2 Interest expense
On tax deliquency 25,000.00
Loans payable to Tina 36,000.00
On loans payable to BDO 100,000.00
161,000.00

3 Penalties
Late filing of income tax return 1,000.00
Breach of lease contract 20,000.00
21,000.00

4 Loss on decline in value properties


Loss from impairment of store equipment 30,000.00

5 Total itemized deductions 812,000.00


Philippines U.S.A.
Gross sales 4,760,000.00 1,540,000.00
COS (1,360,000.00) (440,000.00)
Goss profit 3,400,000.00 1,100,000.00
Other income not subject to final tax 200,000.00 100,000.00
Idendified gross income 3,600,000.00 1,200,000.00
Unidentified gross income 300,000.00 100,000.00
Gross income from business 3,900,000.00 1,300,000.00
Business expenses (3,075,000.00) (970,000.00)
Taxable income (tax credit) 825,000.00 330,000.00
Income taxes paid (108,900.00)
Taxable income (allowable deduction) 825,000.00 221,100.00
Resident foreign

Domestic - Domestic - tax


allowable credit
Income tax due 394,785.00 450,000.00
Less: tax credits
Prior quarter payment (135,000.00) (135,000.00)
CWTs (90,000.00) (90,000.00)
Foreign income tax paid (LOWER) (174,150.00)
Income tax still due and payable 169,785.00 50,850.00

Limit B
Philippines U.S.A.
Taxable income (tax credit) 825,000.00 330,000.00
Philippine income tax due 450,000.00 99,000.00
vs.
Actual foreign tax paid 108,900.00
Lower 99,000.00
Italy Taiwan Total
1,260,000.00 350,000.00 7,910,000.00
(360,000.00) (100,000.00) (2,260,000.00)
900,000.00 250,000.00 5,650,000.00
- 50,000.00 350,000.00
900,000.00 300,000.00 6,000,000.00
75,000.00 25,000.00 500,000.00
975,000.00 325,000.00 6,500,000.00
(720,000.00) (235,000.00) (5,000,000.00)
255,000.00 90,000.00 1,500,000.00
(53,550.00) (21,600.00) (184,050.00)
201,450.00 68,400.00 1,315,950.00
Domestic

Resident foreign

247,500.00

(135,000.00)
(90,000.00)

22,500.00

Limit B
Italy Taiwan Limit A
255,000.00 90,000.00 675,000.00
76,500.00 27,000.00 202,500.00

53,550.00 21,600.00 184,050.00


53,550.00 21,600.00
174,150.00

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