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Subject: Income Taxation

Use the following data for the next two (2) questions: Mr. Nag-aalangan created a trust naming his eldest son, Kadudaduda as revocable beneficiary who will receive the income of the trust. If the eldest son could not abide with the terms provided in the trust instrument, Mr. Nag-aalangan could change anytime the terms of the trust. For the current taxable year, the trust earned a net income of P1,000,000. On the other hand, the grantor earned a compensation income of P1,500,000 and business income of P1,000,000. No part of the income of the trust were distributed to the revocable beneficiary during the year. Determine the following: 39. The taxable income of the trust a. P1,000,000 b. P980,000 c. P950,000 d. nil 40. The taxable income of the grantor a. P1,000,000 c. P3,000,000 b. P2,500,000 d. P3,500,000 Use the following data for the next two (2) questions: On January 1, 2020, Francis established a trust fund for the benefit of his daughter, Princess. Francis appointed Atty. Lo Yer as the trustee. The property transferred to the trust is a piece of lot with a dormitory earning rental income. During the year, the trust earned P10,000,000 revenues and incurred expenses of P2,000,000. Out of the trust's income, Atty. Lo Yer gave Princess P1,500,000. In the same year, Princess earned compensation income of P1,850,000, net of withholding tax of P650,000. Determine the following: 41. Taxable income of the trust a. P5,000,000 c. P8,000,000 b. P6,500,000 d. P10,000,000 42. Taxable income of Princess a. P1,500,000 c. P2,500,000 b. P1,850,000 d. P4,000,000