1. Beth received a total sum of P42,000 from her employer consisting of the following:
   1. P5,000 reimbursements for employers expenses paid by Beths
   2. P15,000 payment of Beths computer set purchased by the employer
   3. P22,000 monthly salary

Beths computer set cost her P12,000. Compute the total return on capital which can be subject to income tax.

2. Betty purchased a P1,500,000 life insurance policy for P50,000. During the year, Betty died and her heirs collected the entire proceeds. How much of the proceeds is exempt from income tax?

3. Alexander insured his newly constructed building costing P1,000,000. Within a few days, the building was totally destroyed by a fire. The insurance company reimbursed Alexander P1,500,000, which represents the fair value of the building.

Which statement is false?

1. P1,500,000 is a return of capital.
2. P1,000,000 of the proceeds is a return of capital
3. P500,000 of the proceeds is a return on capital.
4. Only b and c

4. Kendrick received the flowing items during the year:
   1. P200,000 donation from a girlfriend
   2. P150,000 service fee from professional services
   3. P300,000 inheritance from his deceased father
   4. P100,000 income from illegal gambling
   5. P50,000 gain on sale of his personal car
   6. P250,000 profits from his bar restaurant

Compute the total income subject to income tax.

5. Sarah has the following items of income:

Philippines Abroad

Business income P200,000 P100,000

Professional fees 100,000 50,000

Compensation income 400,000 -

Rent income 300,000 200,000

Interest income 30,000 40,000

1. Assuming Sarah is a resident citizen, compute the total income subject to Philippine income tax.
2. Assuming Sarah is a resident alien, compute the total income subject to Philippine income tax.
3. Assuming Sarah is a resident Foreign corporation, compute the total income subject to Philippine income tax.
4. Assuming Sarah is a domestic corporation, compute the total income subject to Philippine income tax.

6. Kate has the following income in 2023:
   1. P10,000 interest income from a non-resident Japanese friend
   2. P40,000 interest income from Philippine residents
   3. P500,000 rent income from a commercial complex located in the USA which is leased to resident Filipinos
   4. P200,000 rent income from a boarding house in Baguio City, Philippines
   5. P200,000 professional fees rendered to Chinese clients in Hong Kong
   6. P300,000 salary from a resident employer
   7. P100,000 gain from sale of merchandise imported and sold to Filipino residents
   8. P50,000 gain on sale of merchandise purchased locally and sold during her business travel in Hong Kong
   9. P400,000 gain on sale of the boarding house located in Baguio City to a non-resident buyer

Compute the total income earned from sources

1. Within the Philippines
2. Outside the Philippines