Name:

1. Which is a correct statement?

a. The compensation income of
managerial or supervisory employee is
subject to fringe benefit tax
b. The taxable fringe benefit of tank and
file employee is subject to fringe
benefit tax
c. The taxable fringe benefit of
managerial and supervisory employee
is subject to regular income tax
d. The compensation income of rank
and file employee is subject to
regular tax
2. Which is not a supplemental
compensation income?
a. 13th month pay
b. Honoraria
c. Allowances
d. Bonuses
3. Fringe benefits includes
a. Basic salaries
b. Fees
c. Retirement and separation pay
d. De minimis benefits
4. De minimis benefits are generally
a. Exempt from tax
b. Fully taxable
c. Taxable in excess of P30,000
d. Subject to fringe benefit tax
5. The term de minimis do not include
a. Christmas bonus
b. Christmas gift
c. Rice subsidy
d. Monetized unused vacation leave
6. All items of passive income earned
abroad is subject to regular tax to
a. Resident citizen only
b. Domestic corporations only
c. Resident citizens and domestic
corporations
d. All taxpayers
7. Which taxpayer is not subject to regular
tax?
a. Domestic corporation
b. Resident corporation
c. Non-resident foreign corporation
d. Business partnership or joint venture
8. Which individual taxpayer is not subject
to progressive tax?
a. Non-resident aliens engaged in trade
or business
b. Resident citizens
c. Resident aliens
d. Special aliens
9. Individual taxpayer shall report their
income on
a. A fiscal year

b. A calendar year
c. Either fiscal or calendar
d. A crop year
10.Corporations are allowed to report their
income on
a. A fiscal year
b. A calendar year
c. Either fiscal or calendar year
d. A crop year
11.Which is not an exclusion from gross
income?
a. SSS benefits
b. Income from government and its
political subdivisions
c. Income from foreign governments
d. Income from government owned
and controlled corporations
12.Termination benefits are exempt from
income tax provided that the reason for
termination is
a. Within the employers control
b. Within the employees control
c. Beyond the employers control
d. Beyond the employees control
13.The assignment of an insurance policy at
an amount in excess of premiums paid on
the policy is subject to
a. Income tax
b. Donors tax
c. Estate tax
d. Any of these
14.A policy who outlived the policy and
received cash surrender value in excess
of premiums paid is exempt upon
a. The entire amount received
b. The excess of the amount received
over the premiums paid
c. The amount representing a return
of premiums
d. All of the above
15.Which is not an acceptable ground for
exemption of termination pay?
a. Mass employee lay-of
b. Closure of employers business
c. Grave misconduct and neglect of
duty
d. Retrenchment of employers business
16.The following may be relevant in the
determination of taxable income
A. Gross income subject to regular tax
B. Gross income subject to final tax
C. Deductions from gross income
D. Personal exemptions
17.Which is not considered in the
determination of corporate taxable
income?
a. A and B
b. C and D
c. B and D

d. D only

18.In the immediately preceding problem,

which is not considered in the
determination of individual taxable
income?
a. A and D
b. B and D
c. B only
d. D only
19.Which is a source of income subject to
regular income tax?
a. Employment
b. Trade or business or exercise of a
profession
c. Casual sales transactions
d. All of these
20.Which of the following corporate
taxpayers is not subject to tax on taxable
income?
a. Domestic corporation
b. Business partnership
c. Resident foreign corporation
d. Non-resident foreign corporation
21.Which interest income will not be
included in the income tax return?
a. Interest income from bank
deposits
b. Interest income from lending
c. Interest income from notes
d. Interest income from employees
22.Which of the following sales of domestic
stocks is subject to capital gains tax?
a. Sale of domestic stocks through PSE
b. Sale of domestic stocks directly to
buyer
c. Issue of domestic stocks to subscribers
d. Exchange of stocks for stocks in a
corporate merger
23.The sale of listed shares will never be
subjected to
a. 6% capital gains tax
b. of 1% percentage tax
c. 5% - 10% capital gains tax
d. Any of these
24.The sale of an office building will be
subject to
a. of 1% percentage tax
b. 6% capital gains tax
c. 5% - 10% capital gains tax
d. Regular tax
25.The sale of which of the following may be
exempted from the 6% capital gains tax?
a. Developed residential properties for
sale
b. Principal residence
c. Unused land to the government
d. Residential lot

26.Which is a capital asset to a realty

developer?
a. Domestic stocks
b. Vacant lot held for future development
c. Construction equipment
d. Head office building of the developer
27.Which is covered by final tax?
a. Interest income from foreign banks
b. P10,000 taxable prizes from the
Philippines
c. Share in the net income of a joint
venture
d. Share in the net income of a general
professional partnership
28.Which is not subject to 10% final tax?
a. Royalties from literary works
b. Dividends from a domestic corporation
c. Share in the net income of a business
partnership
d. Royalties from a business
trademark
29.Which is not subject to 20% final tax?
a. Interest income from trust funds
b. Royalties from musical
compositions
c. P11,000 prizes
d. Winnings
30.Dividends declared by a resident foreign
corporation is
a. Exempt from any tax
b. Subject to 10% final tax
c. Subject to regular income tax
d. Subject to 20% final tax
31.The exemption on final tax on interest
from long-term deposit is not applicable
to
a. Corporations
b. Citizens
c. Residents
d. All of these
32.Which is not an income tax scheme?
a. Final income taxation
b. Ordinary gains taxation
c. Capital gains taxation
d. Regular income taxation
33.Initial payment means
a. Downpayment
b. Installment payments, exclusive of
downpayment, within the year the
installment sale was made
c. Total collections within one year from
the date the installment sale was
made
d. Total collection within the year
the installment sale was made
34.Which is not an item of passive income?
a. Royalties
b. Salary

c. Deposit interest income

d. Prizes
35.Which of the following accounting
methods is most consistent with the
lifeblood doctrine?
a. Accrual method
b. Cash basis
c. Installment method
d. Percentage payment method

SHORT PROBLEMS Write your final

answer on the space provided.

Transaction
Purchase
40,000
Purchase
63,000
Sale
92,000

Quantity
20,000

Price

30,000
40,000

6. Assuming the FIFO method is used,

compute for the capital gains tax of ABC.
500
7. Assuming the moving average method is
used, compute for the capital gains tax of
ABC. 480

PROBLEM 1
Iligan, Inc. has the following receipts during
2014:
From services billing clients
Advances from clients
Total cash collections

400,000
100,000
500,000

The P100,000 advances refer to services

which will be rendered next year. Total
uncollected billing increased from P100,000
in in December 31, 2010 to P150,000 at
December 31, 2014.
1. Compute for the gross income under cash
basis. 500,000
2. Compute for the gross income under
accrual basis. 550,000
PROBLEM 2
During 2014, the taxpayer received the
following prizes and winnings:
Passive Income
Abroad
Prizes
400,000
Winnings

PROBLEM 4
Mrs. Kapalong, resident citizen, has several
interests in various businesses and
partnerships. She earned the following
income during the year:
Dividends from domestic corp.
120,000
Dividends from resident foreign corp.
80,000
Share in the NI of a business part.
200,000
Share in the net income of GPP
100,000

Phil.
10,000
400,000

100,000

3. What is the reportable item of gross

income subject to regular tax if the
taxpayer is a resident citizen? 510,000
4. What is the reportable item of gross
income subject to regular tax if the
taxpayer is a non-resident citizen?
10,000
5. What is the reportable item of gross
income subject to regular tax if the
taxpayer is a resident foreign
corporation? 410,000
PROBLEM 3
ABC Company, a domestic corporation, has
the following transactions on the sale of
stocks of another domestic corporation:

8. How much is the gross income subject to

regular income tax? 180,000
9. How much is the final tax to be withheld?
32,000
10.How much is the gross income subject to
final tax? 320,000

ANSWERS:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.