Quiz 1

True or False. Write TRUE if the statement is TRUE and FALSE if the statement is FALSE.
1. Terminal leave pay of government employee is exempt from income tax.
2. Monetized value of unutilized sick leave credits of 10 days or less which were paid to private
employees is not subject to income tax.
3. Terminal leave pay of private employee is exempt from income tax.
4. Living quarters or meals given to employee for the convenience or advantage of employee is taxable
gross income.
5. Partners share in the distributable net income of general professional partnership is subject to final
tax.
6. One of the requisites for the retirement benefit to be exempt is that the retirement employee must be at
least 60 yrs. old.
7. Inheritance received is an item of gross income.
8. Only those employees rendered more than 10 years of service under the same employer can be
exempted from income tax for their retirement benefits. In addition, individual can claim the retirement
benefit exemption twice.
9. Separation pay received by employees beyond their control is taxable.
10. Cash dividend received by resident citizen from Domestic Corporation is subject to regular income
tax.
11. Cash dividend received by resident citizen from foreign corporation whose income from Philippine
sources is 50% of its total income is partly taxable.
12. Cash dividend received by resident alien from foreign corporation whose income from Philippine
sources is 50% of its total income is partly taxable.
13. Gain from sale of long term bond is an exclusion from gross income.
14. Separation pay received as part of voluntary retirement program is an exclusion from gross income.
15. The due date of the first quarter income tax return of Domestic Corporation using calendar year is on
April 15.
16. Liquidating dividend received by stockholder is partly taxable if the dividend exceeds the cost of
investment.
17. Interest payment on proceeds of life insurance is an exclusion from gross income.
18. Self-employed individual file its 1st quarter income tax return on April 15 of the current year.
19. Personal Equity and Retirement Account (PERA) (RA 9505) can be used to minimize tax dues.
20. Gross income includes the Value Added Tax.

Problems:
1.
Net Income (Loss)
Before Write Off
Write-off Allowed by BIR
Write-Off Disallowed by
BIR
Net Income(Loss) After
Write-Off

2013
200,000

2014
150,000

2015
(20,000)

100,000
50,000

200,000
30,000

20,000
20,000

50,000

(80,000)

(60,000)

Assume all the accounts written off were recovered during 2016. Determine the total taxable income from
the recovery.
2. Positive Lang, a resident citizen and a rank a file employee is working in Go Lang, a private company.
He received the following during the year (2015).
Monetized Unused Vacation Leave 20 days
Monetized Unused Sick Leave 10 days
Medical cash allowance to dependents of employees
Uniform and Clothing Allowance
Actual Medical Assistance
Laundry Allowance
Employee Achievement Award
Gifts given during Christmas
3 days Overtime meal allowance (Assume Minimum Wage is 400 per
day)
Rice Subsidy
13th month pay
Mid-Year Bonus
Compensation Income
Determine the taxable income before personal exemption.

Actual Benefits
50,000
25,000
1,500
6,000
30,000
5,000
5,000 in kind and
10,000 cash
7,000
450
20,000
50,000
50,000
600,000

3-5
a

Dividend income from two domestic corporations. The Gross income from the Philippines
for the past 3 years
40% of its world income
100,000
75% of its world income
190,000
Dividend income from two resident foreign corporations. The Gross income from the
Philippines for the past 3 years
30% of its world income
140,000
70% of its world income
200,000

3. Assume the taxpayer is domestic corporation, determine the total gross income subject to regular
income tax and final tax, respectively.

4. Assume the taxpayer is resident citizen, determine the total gross income subject to regular income tax
and final tax, respectively.
5. Assume the taxpayer is non-resident citizen, determine the total gross income subject to regular
income tax and final tax, respectively.
6. Lilipad A. Ko, a resident alien received the following during the year:
Inheritance
350,000
Interest Income from bank deposit abroad
700,000
Rent Income (Philippines)
200,000
Compensation Income
600,000
Interest Income from Local Bank deposit (short20,000
term)- gross
Rent Income -Abroad
35,000
Interest income on note receivables- debtor resides 10,000
in the Philippines
Interest income on note receivables- debtor resides 15,000
in China
PCSO Winnings
25,000
Prizes from Raffle in the Philippines
5,000
Other Winnings in the Philippines
30,000
UAE lottery winnings
150,000
Determine the taxable income subject to basic tax before personal exemption?
7. Using the information in # 6, determine the taxable income subject to basic tax before personal
exemption assuming the taxpayer is a resident citizen.
8. Masasagot Ko To Company is a domestic corporation established on 2003. During the year (2015), the
corporation manufactured goods costing 10,000,000 and exported 80% of the production to its foreign
affiliates at a price of 10,000,000. The remaining goods were sold in the Philippines for 3 million.
Determine the total taxable income assuming the market value sold to foreign affiliates is 13,000,000 as
determine by the BIR.

Quiz 2
True or False. Write TRUE if the statement is TRUE and FALSE if the statement is FALSE.
1. Ordinary losses are deductible from capital gains but net capital loss cannot be deducted from ordinary
gain.
2. Contribution of the employer for the retirement insurance and hospitalization benefit plan of its
managers are taxable fringe benefit.
3. Capital losses are deductible only to the extent of capital gain; hence, the net capital loss is not
deductible.
4. Fringe benefits given to rank and file employees are subject to regular income tax (schedular).
5. The fringe benefit tax rate is applied to the monetary value of fringe benefit.
6. Fringe benefit tax is imposed on the employer and withheld at source.
7. Real and other properties acquired by banks and lending institutions like residential land previously
foreclosed are capital assets.
8. The holding period does not apply to corporations, hence, capital gains and losses are recognized at
50%.
9. The net capital loss can be carried over in the next succeeding year for corporations.
10. Net capital loss carry over in a taxable year should not exceed the capital gain in the year the loss
was incurred.
11. Benefits given for the convenience or advantage of employee are not subject to fringe benefit tax.
12. The fringe benefit tax is a tax imposed on managerial or supervisory employee.
13. Fringe benefits are the facilities or privileges by an employer to his employees that are relatively small
value and are offered or furnished by the employer as a means of promoting goodwill, health,
contentment or efficiency of his employees.
14. Temporary housing of a manager who stays in the housing unit for 2 months is subject to fringe
benefit tax.
15. Educational assistance granted to employees dependents through competitive scheme scholarship
program of the company can be subjected to fringe benefit tax if the employee is holding managerial or
supervisory position.
16. Housing unit given to a manager located within 30 meters from the perimeter of the business is
exempt from fringe benefit tax if it is for the convenience or advantage of employer.
17. For the purpose of fringe benefit tax, the annual depreciation value of real property is 20% of the
value of the property.
18. Employees who received benefits subject to fringe benefit tax do not need to file income tax return to
report such benefits.

19. Managers personal expense receipted in the name of employer and paid by the employer is exempt
from fringe benefit tax.
20. Net operating loss carry over and net capital loss carry over came from dealings in capital assets
only.
Problems:
1. Pampabawi Quiz, married and a resident citizen had the following data for 2015.
Income from ordinary assets
500,000
Long-Term Capital Gain
80,000
Short-term capital loss
25,000
Loss due to failure to exercise 60 days option to
30,000
buy
Liquidating dividend received from a domestic
100,000
corporation (Investment in year 2000- P70,000)
Determine the taxable income of Pampabawi Quiz before personal exemption.
2014
2015
Ordinary Taxable Income
12,000
300,000
Gain from sale of capital assets:
Held for 15 months
12,000
80,000
Held for 17 months
40,000
20,000
Loss from sale of capital assets:
Held for 19 months
20,000
30,000
Held for 8 months
30,000
20,000
2. Determine the taxable income for the year 2015 if the taxpayer is a resident citizen (before personal
exemption)
3. Using the data in #2, determine the taxable income for the year 2015 if the taxpayer is a corporation.
4. HAHAHAHA Co., a resident foreign corporation had the following transactions during the year (2015):
Rental income from real property, net of 5%
190,000
Withholding tax
Capital gain from sale of domestic shares, not
150,000
traded
Capital gain from sale of domestic shares, traded
100,000
Capital gain from sale of foreign shares
200,000
Sale of Vacant lot
Selling Price 1,000,000 Cost 300,000
Loss from sale of car
50,000
Other transactions:
In 2012, the company purchased shares from HEHEHE Corp for 100,000 which became worthless and
was written off during the year.
Determine the taxable gross income subject to regular income tax.
5. The following benefits were given by Mapagbigay Corp. to its managers during the year.
Educational assistance to 3 managers (all are
resident citizens)
Contribution to the retirement insurance and
hospitalization benefit plan (all are resident

450,000
300,000

citizens)
Annual rental paid by the company for the
condominium unit of the general manager, a
special alien.
The company owns a condominium unit which was
being used by one of the managers (non-resident
citizen). It has a fair market value per real property
declaration of 4,000,000 and a zonal value of
3,000,000.
The company purchased and gave a house and lot
to the CEO(resident citizen). The ownership was
transferred to the CEO
Car plan given to the chief accountant (resident
citizen). The company shouldered 60% of the
purchase price.
Second hand car was purchases on an installment
basis and given to technical manager (special
alien). Ownership was transferred to the manager.
Home Owners Association Dues of 5 managers
(all are non-resident aliens)
A, a non-resident alien manager lends 1,000,000
from the company in the beginning of the year. It
was stipulated in the agreement that the amount
shall be paid in one year with an annual interest
rate of 5%.
Representation and entertainment allowance which
are fixed in amount and regularly received by all
resident citizen managers
Determine the following:

1,500,000

7,000,000

Purchase Price= 8,000,000

Purchase Price=200,000
Down Payment=50,000
Four Annual Installment of 50,000
100,000
?

500,000

5. Monetary value of benefits subject to fringe benefit tax.

6. Fringe benefit tax due for the year.
Sal A. Mat, a manager of Tax Co., received the following during the year.
Monetized Unused Vacation Leave 20 days
Monetized Unused Sick Leave 10 days
Medical cash allowance to dependents of employees
Uniform and Clothing Allowance
Actual Medical Assistance
Laundry Allowance
Employee Achievement Award

Actual Benefits
50,000
25,000
1,500
6,000
30,000
5,000
5,000 in kind and
10,000 cash
7,000
450

Gifts given during Christmas

3 days Overtime meal allowance (Assume Minimum Wage is 400 per
day)
Rice Subsidy
20,000
13th month pay
50,000
Compensation Income
600,000
7. Determine the taxable income before personal exemption assuming Sal A. Mat is a resident citizen.

8. Compute for the fringe benefit tax due.