Reference no: EM132779266

Problem 1: Mr. Rolly Gomez operates a. small night-club in which he employs dancers to dance with the patrons of his night club. In 2018, his gross receipts, cost of services, and operating expenses amounted P2800,000 P100,000 and P35,000 respectively. The night club also earned other non-operating income of P150,000 in 2018. Can he avail of the 8% income tax rate option? What is his income tax due for 2018?

A. Yes, because his gross receipts plus non-operating income do not exceed P3,000,000; Tax due is P216,000 under the 8% tax regime.

B No, because his business is subject to the 18% OPT under Section 125 and not to the 3% OPT under Section 116. Tax due is P750,800 under the graduated rates,

C. Yes and No. He can avail of the 8% income tax rate option if he chooses this option in his 1 Quarterly ITR. Otherwise, he will be taxed under the graduated rates.

D. None of the above.