1) Letran Corporation is engaged in consultancy services and is owned by Mr. Gab and Ms. Princess equally. For the year 2020 it generated revenues from services amounting to Php20 Million, salaries and other costs were around Php5 Million. In December 1, 2020, it declared dividends amounting to Php5 Million. How much would Mr. Gab pay for final income taxes from the dividend income he received from Letran Corporation?

 

2) Letran Corporation is engaged in consultancy services and is owned by Mr. Gab and Ms. Princess equally. For the year 2020 it generated revenues from services amounting to Php20 Million, salaries and other costs were around Php5 Million. In December 1, 2020, it declared dividends amounting to Php5 Million. How much from the dividends received by Ms. Princess will be subject to regular income tax? 

Questions:

1. Letran Corporation is engaged in consultancy services and is owned by Mr. Gab and Ms. Princess equally. For the year 2020 it generated revenues from services amounting to Php20 Million, salaries and other costs were around Php5 Million. In December 1, 2020, it declared dividends amounting to Php5 Million. How much would Mr. Gab pay for final income taxes from the dividend income he received from Letran Corporation?

Answer: P250,000 final tax

Dividend income  P5,000,000 x 50% share of Mr. Gab= P2,500,000 

P2,500,000 x 10% final tax= P250,000 final tax

Note:

*Basis: Sec. 24(B)(2) of NIRC.

2. Letran Corporation is engaged in consultancy services and is owned by Mr. Gab and Ms. Princess equally. For the year 2020 it generated revenues from services amounting to Php20 Million, salaries and other costs were around Php5 Million. In December 1, 2020, it declared dividends amounting to Php5 Million. How much from the dividends received by Ms. Princess will be subject to regular income tax? 

Answer: P0.00 or NOT subject to regular income tax.

Dividend income  P5,000,000 x 50% share of Ms. Princess= P2,500,000 

Note:

*Basis: Sec. 24(B)(2) of NIRC.

*Dividend income received from a domestic corporation is subject to FINAL tax and NOT of regular income tax. 

Step-by-step explanation

1. Answer: P250,000 final tax

Dividend income  P5,000,000 x 50% share of Mr. Gab= P2,500,000 share

P2,500,000 x 10% final tax= P250,000 final tax

Note:

*Basis: Sec. 24(B)(2) of NIRC.

2. Answer: P0.00 or NOT subject to regular income tax.

Dividend income  P5,000,000 x 50% share of Ms. Princess= P2,500,000 share

Note:

*Basis: Sec. 24(B)(2) of NIRC.

*Dividend income received from a domestic corporation is subject to FINAL tax and NOT of regular income tax.